Balfour Beatty, the international infrastructure group, announces the disposal of its 50% interest in the University Hospital of North Durham PPP project (“Durham”) and its 100% interest in the Knowsley Building Schools for the Future (BSF) project (“Knowsley”) for a total consideration of £97 million, generating total gains on disposal of £51 million. The proceeds from these transactions exceed the Directors’ valuations by £44 million, representing an uplift of 82%.
These transactions are in line with Balfour Beatty’s strategy to recycle equity invested in its portfolio, and further demonstrate the quality of the investment portfolio and its ability to generate value for shareholders. The proceeds will be used to invest in new and existing projects, in areas that align with the Group's target geographies and market sectors.
The sale of Knowsley for £42 million is unconditional and is expected to complete shortly. The sale of Durham for £55 million remains subject to the right of the co-shareholder to exercise its rights of pre-emption at the proposed sale price, with completion expected to occur by mid-July. Both assets are being acquired by funds managed by Dalmore Capital Limited, with consideration to be paid in cash in full on completion of each transaction.
Commenting today, Balfour Beatty Executive Chairman, Steve Marshall, said: "These disposals are in line with our strategy to generate income from our Infrastructure Investments business through disposals, thereby releasing cash for future investments and delivering value for our shareholders. The transactions demonstrate the quality and liquidity of our portfolio, and show again a substantial premium to the Directors’ valuation.”
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Notes to editors:
1. Description of the projects that are the subject of the disposals:
University Hospital of North Durham PPP Project
The £90m contract for the design, build, finance and operation of the 566 bed University Hospital of North Durham was entered into between Consort Healthcare (Durham) Limited and the North Durham Acute Hospitals NHS (now the County Durham and Darlington NHS Foundation) on 12 March 1998 (the Contract). The project is for a 30 year period, comprising a three year design and construction stage followed by a 27 year operational stage. The project became operational in 2001 and is currently in year 13 of operations.
Knowsley Building Schools for the Future (BSF) Project
The contract for the design, build, finance and operation of seven schools in Knowsley was entered into between Transform Schools (Knowsley) Limited and Knowsley Metropolitan Borough Council on 13 December 2007. The contract was varied in 2011 to provide for the construction of a ‘Special Educational Needs’ school. The total capital value of the project is approximately £180m. The project is for a 27 year period comprising a design and construction stage of approximately two years followed by an operational stage of circa 25 years. The project became operational in 2009 and is currently in year five of operations.
2. Summary financial information relating to the two projects as included in the Group’s accounts for the year ended 31 December 2013:
|Gross Assets||£39 million||£8 million|
|Profit Before Tax||£4 million||£2 million|
3. Balfour Beatty (www.balfourbeatty.com) is an international infrastructure group that delivers world class services essential to the development, creation and care of infrastructure assets; from finance and development, through design and project management to construction and maintenance.
Our businesses draw on more than 100 years of experience to deliver the highest levels of quality, safety and technical expertise to our clients principally in the UK and the USA, with developing businesses in Australia, Canada, the Middle East, South Africa and South East Asia.
With proven expertise in delivering infrastructure critical to support communities and society today and in the future, our key market sectors focus on infrastructure - transportation (roads, rail and aviation), power and energy, water, and complex buildings (both commercial and social).
Balfour Beatty employs 40,000 people around the world.