Balfour Beatty, the international infrastructure group, today announces that it has reached an agreement with funds managed by Dalmore Capital Limited (Dalmore) to sell a 12.5 percent stake in Connect Plus, the company which operates the M25 orbital motorway.
The sale is for a cash consideration of £103 million, which is in excess of the Directors’ valuation as at 30th June 2017. The sale, which is subject to Highways England consent, is expected to complete before year end. The proceeds from this transaction will be used to pay down borrowings in 2018.
As a result of this transaction, the Board’s expectations for both Group profit before tax and year end net cash in 2017 are higher than those included in the Balfour Beatty Trading Update on 12 December 2017. The expected profit on disposal on this transaction at £53 million is £37 million higher than the market consensus of £16 million for Infrastructure Investments profit on disposal in 2017. The year end net cash, which was forecast to be in line with prior year, is now expected to be around £103 million higher.
In addition, Balfour Beatty has entered into a series of arrangements with funds managed by Equitix Investment Management Limited and Dalmore under which up to an additional 12.5 percent interest in Connect Plus may be sold by Balfour Beatty at an equivalent price. These arrangements lapse on 13 May 2018 and are subject to a number of conditions. Therefore there is no certainty that there will be any subsequent transaction.
For the year ended 31 December 2016, Investments in Joint Venture & Associates in relation to the Group’s 12.5 percent interest in Connect Plus was £78 million1 and it contributed profit before tax of £8 million to the Group’s results. The Group continues to hold a 27.5 percent stake in Connect Plus.
Leo Quinn, Group Chief Executive, said: “This transaction emphasises the ongoing attractiveness of our infrastructure assets and is in line with our declared intent to maximise value for shareholders.”
1The Investment in Joint Ventures and Associates at 31 December 2016 reflects the net position after financial asset and swap liability revaluations. These revaluations will be recycled to the income statement as part of the gain on disposal of the Group’s interest in Connect Plus.
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Notes to editors:
- Balfour Beatty (www.balfourbeatty.com) is a leading international infrastructure group. With 30,000 employees, we provide innovative and efficient infrastructure that underpins our daily lives, supports communities and enables economic growth. We finance, develop, build and maintain complex infrastructure such as transportation, power and utility systems, social and commercial buildings.
- Our main geographies are the UK, US and Far East. Over the last 100 years we have created iconic buildings and infrastructure all over the world including the London Olympics’ Aquatic Centre, Hong Kong’s first Zero Carbon building, the National Museum of the Marine Corps in the US and the Channel Tunnel Rail Link.
- The shareholders of Connect Plus following the sale of 12.5 percent to funds managed by Dalmore will be:
- 40% - BBDE Orbital Holdings LLP (comprising Balfour Beatty Infrastructure Investments Limited (BBIIL) 68.75% and funds managed by Dalmore Capital Limited 31.25%)
- 40% - EDGE Orbital Holdings Limited
- 10% - EDGE Orbital Holdings 2 Limited
- 10% - Egis Investment Partners S.C.A