Costain part-owner is 'trading on a thin line'

by John Leitch

Intria, the Far Eastern group with a 37 per cent stake in Costain, is "trading on a thin line" a Malaysian stockbroker said on Monday. He expected Intria to apply for court protection soon to keep the business afloat.

The analyst said: "A lot of struggling Malaysian companies are applying for court protection so that creditors are not allowed to institute actions for six to nine months.

"I wouldn't be surprised if it applied for court protection or went into voluntary receivership. Its gearing [borrowings compared to assets] is relatively high. Intria doesn't have the necessary cashflow, which means it can't get enough money to repay its loans and interest charges.

"As a result, it must sell its shareholding in Costain," he said.

The Malaysian firm is 50.1 per cent owned by Mekar Idaman, another Malaysian company, which called in the receiver on 20 July after defaulting on £83 million-worth of external loans.

It was rumoured last week that Skanska, which holds 7.6 per cent of Costain's shares, was bidding 20p a share for Intria's holding, but that Arthur Andersen, receiver for Mekar, was holding out for 80p. Anders Karlsson, president of Skanska Europe, said. "We are not in a negotiation process with either Intria or Mekar," he said.

Asked if Skanska was thinking of taking up a larger stake in Costain, Karlsson said: "No comment."