UK contractor to exit Saudi Arabia, Egypt and Qatar
The UK contractor Carillion has said it is pulling out of Saudi Arabia, Egypt and Qatar, as its CEO stepped down amid cashflow pressure.
The group also said it has sold its 50 percent stake in its business in Oman, Carillion Alawi, for an immediate cash consideration of £12.8m.
“Deterioration in cash flows on a select number of construction contracts led the Board to undertake an enhanced review of all of the Group’s material contracts,” Carillion said in a statement.
The London-listed company’s board announced a “comprehensive review of the business and the capital structure,” saying it will exit the three Middle East markets, as well as quitting all construction PPP projects.
It will now only undertake “future construction work on a highly selective basis and via lower-risk procurement routes.”
“Despite making progress against the strategic priorities we set out in our 2016 results announcement in March, average net borrowing has increased above the level we expected, which means that we will no longer be able to meet our target of reducing leverage for the full year,” said Philip Green, Non-Executive Chairman.
“We have therefore concluded that we must take immediate action to accelerate the reduction in average net borrowing and are announcing a comprehensive programme of measures to address that, aimed at generating significant cashflow in the short-term.
“In addition, we are also announcing that we are undertaking a thorough review of the business and the capital structure, and the options available to optimise value for the benefit of shareholders. We will update the market on the progress of the review at our interim results in September.
“Richard Howson has stepped down as Group Chief Executive and from the Board with immediate effect and Keith Cochrane, previously our Senior Independent Non-Executive Director, will take over as interim Group Chief Executive, while a search is underway for a new Group Chief Executive. We are fortunate to have had Keith as a Non-Executive member of our Board as he has considerable plc CEO experience. Richard will stay with the Group for up to one year to support the transition.”