Dubai contractor to take 15% stake in Costain

Aaron Morby 3 years ago
Share

UAE contractor ASGC is to invest £25m in Costain as part of the firm’s £100m cash-raising share issue.

Chief executive Alex Vaughan says Costain can weather coronavirus pandemic, using cash raising to strengthen balance sheet
Chief executive Alex Vaughan says Costain can weather coronavirus pandemic, using cash raising to strengthen balance sheet

The move will give the $1bn turnover contractor a 15% stake in Costain’s business.

Costain this morning confirmed that its joint book-runners had successfully placed all 167m shares in the fund raising.

Alex Vaughan, chief executive officer, said: We are pleased to have secured significant support from investors for this fundraising.

“With a stronger balance sheet and the positive long term outlook for UK infrastructure, Costain will be better placed to benefit from the significant market opportunity in front of us.

Around 80% of the funds are being raised through a firm placing, while the remaining £20m is to come through an open issue of shares at a discount of 20% to the 75p share price yesterday.

Banking partners have agreed, subject to the completion of the capital raising, to extend Costain’s existing debt facilities, which are due to be renewed next month,  to September 2023.

Its new major stakeholder, Dubai headquartered construction group ASGC, said it saw significant long-term, structural growth opportunities in UK infrastructure.

Established in 1989, the business employs 17,000 staff focussed on delivering turnkey special projects in the UAE, and more recently Egypt and Africa.

ASGC is delivering landmark projects such as the Coca-Cola Arena in Dubai, expansion and improvement works for Dubai International Airport, expansion of the Dubai Mall, the Waldorf Astoria on the Palm Jumeirah as well as several pavilions for Dubai EXPO 2020.

Costain’s board also this morning set out its worst-case scenario planning for the impact of the pandemic.

Based on a six-month disruption due to lockdown and new social distancing measures, Costain forecasts a 56% reduction in profit from complex projects, a 10% reduction in profit from higher-margin consultancy, and a 43% fall in profit on new work obtained.

It said that based on this scenario, the £100m cash-raising and access to existing facilities it would have sufficient working capital for 12 months.

Costain said most of its clients were pressing ahead with projects under new safe working procedures.

The group has also made reductions to its cost base, deferred capital expenditure, PAYE and VAT payments. The board and senior leadership team has agreed a 30% reduction in salaries for up to three months.

Last month HS2 granted Costain’s joint venture company, Skanska Costain Strabag, notice to proceed to full detailed and design construction of Phase 1 of the HS2 railway in area south as part of the main works contract.

Also Costain was awarded a £210m design and build contract by Highways England to upgrade an existing section of the A30 north of Truro, Cornwall, it was also named one of the six partners in the £4.5bn Smart Motorway Programme Alliance.

Latest news

Domis set for £195m Boddingtons Brewery homes scheme

Developer Salboy buys Manchester site to kickstart long-awiated 556 homes project
39 mins ago

John Lewis £500m funding deal to build 1,000 rental homes

Deal to advance BTR flats at store sites in Bromley, West Ealing and Reading
12 hours ago

Eric Wright wins tricky £52m Liverpool transformation

Contractor working with engineers at Ridge and Partners on "challenging" Stanley Lock Flight site
3 days ago

Investment giant buys Bristol M&E contractor

RDCP Infrastructure acquires Avon Combined Electrical Services
3 days ago

Demolition start for £50m Farnworth town centre rebuild

Caddick Construction is tipped for main works due to start in the spring
3 days ago

L&G Modular strikes deal to build 1,000 affordable homes

Modular homes business teams up with Hampshire's Vivid housing association
3 days ago

Former Erith operations director joins John F Hunt

Scott Exell named new operations director at demolition specialist John F Hunt
3 days ago

Green light for £135m Leeds twin tower resi scheme

Construction to start in New Year on 500 build-to-rent apartments
4 days ago

Mace hits 1m tonnes carbon saving target for clients

Present work pipeline betters 2026 carbon emission saving target
3 days ago

Plans in for £40m surf park at former Kent colliery

Seahive surf lagoon and health resort will be built near Deal
4 days ago

Crushed demolition worker vows to return to industry

Shannon Brasier hoping to return to construction following horror accident
4 days ago

Mount Anvil to start 900-home North London estate rebuild

Planning approval paves way for Barnsbury Estate rebuild in Islington
4 days ago

Green light for major laboratory campus in Cambridge

Developer BioMed to tender first building on 600,000 sq ft lab complex in the New Year
4 days ago

Belfast firm signs the biggest work deal yet under Project Gigabit

Fibrus to hook-up rural Cumbria to lightning-fast broadband under £108m deal
4 days ago

McLaren wins Leeds logistics park contract

Work to start imminently on warehouse complex for Firethorn Trust
5 days ago

Work restarts on £683m waste power plant after site death

Construction suspended for a week of investigations following fatality
5 days ago

Demolition starts on £135m Wigan Galleries scheme

Contractor BCEGI starts work on project to redevelop Wigan town centre
5 days ago

Amey CEO to step down following private equity buyout

Amanda Fisher to leave once business is transferred to new owners
5 days ago

New body set up to vet plant operator card schemes

Contractor trades bodies unite to tackle competency concerns over plant operator skills cards
5 days ago

Kier leads switch to hybrid battery generators

Battery units work alongside smaller generators cutting run times by nearly 60%
5 days ago

Plans in for first Leeds co-living scheme

Watkin Jones submits plan to convert old Direct Line HQ into 230 studio flats
5 days ago

Demolition worker crushed by excavator

Court hears 20-year-old woman was left with "life changing injuries"
6 days ago

Government pays £700m for 50% stake in Sizewell C

New body, Great British Nuclear, will be set up to develop pipeline of nuclear projects
6 days ago

Costain wins Heathrow Airport asset renewal deal

Firm takes early contractor involvement role in Terminal 2 baggage handling upgrade
6 days ago

Worker killed on £683m waste power plant site

Fatal collision involving heavy goods vehicle on giant north London site
6 days ago

HS2 JV shifts four Wembley Stadiums of earth in record time

EKFB team digs and hauls 15 million cu m of muck in 20 months
6 days ago

Milestone wins £300m Wiltshire highways upkeep

Ringway will hand over to Milestone in March next year
6 days ago

Low-risk business model helps Renew post record results

Renew reveals latest acquisition with £15.6m purchase of water specialist Enisca
6 days ago

London Albert Embankment hotel towers approved

Two separate hotels rising to 26 and 29 storeys approved
6 days ago

Keltbray names new director of strategic engineering

Tim Lohmann takes up newly-formed role to drive innovative engineering solutions
6 days ago

Contractor services