Carillion sells PPP stakes

The UK construction group sold down its holdings in the New Accommodation Project in South West England and the Allenby Connaught project in the South of England for £86.9m. The capital will be used to reduce Carillion’s debt.

UK construction group Carillion has sold equity stakes in two public-private partnership projects for £86.9 million (€96 million; $143 million) the company said in a statement.

Carillion sold half of its 40 percent interest in the New Accommodation Project in Cheltenham, Gloucestershire, in the South West of England, and 65 percent of a 50 percent stake in the Allenby Connaught project in Salisbury Plain and Aldershot in the South of England.

In Cheltenham, Carillion built a new headquarters for the UK government’s communications department at a cost of £350 million, according to the firm’s website. In the Allenby Connaught project, Carillion built army barracks for the UK Ministry of Defence at a cost £1 billion, the MoD website said.

Both projects were delivered under the UK government’s private finance initiative programme, which seeks to involve the private sector in the provision of public infrastructure through a standardised procurement process. The MoD website also said Allenby Connaught project was the largest infrastructure project ever let by the agency under the private fiannce initiative.

Carillion said the sales are “in line” with its policy of “recycling equity” in its PPP investments. The sale proceeds will be used to reduce Carillion’s debt, which stood at £442.1 million as of 30 June 2009, according to the company’s unaudited balance sheet at that date.

Carillion said the £86.9 million price tag reflected a net present value of £2.6 billion, had the company held onto the equity stakes full-term. The New Accommodation Project involved a 30-year contract while Allenby Connaught was a 35-year contract, according to project profiles.