Carillion Plc Regulatory News (CLLN)

24 October 2017

Update on financing, disposals and work winning

Carillion plc ("Carillion" or the "Group") provides an update on discussions with its creditors, disposals and new contract wins.

New committed credit facilities

Carillion announced on 29 September 2017 that a term sheet for further committed credit facilities of £140m had been agreed with five of the Group's core lenders. Further to this, the Group is pleased to announce the signing of two committed facilities, totalling £140 million, as contemplated by this term sheet. This additional liquidity is fully available to draw down now. It comprises a £40m senior secured revolving facility maturing on 27 April 2018, secured over shares in certain of the Group's subsidiaries and over certain of the Group's assets, and a £100m senior unsecured revolving facility maturing on 1 January 2019.

In addition, the Group has agreed new committed bonding facilities, together with the deferral of certain pension contributions and the deferral of repayment of private placement notes due in November 2017 and September 2018. These deferrals will be until the earlier of five business days following, (i) the repayment of the new committed facilities, and (ii) 1 January 2019.

When taken together, Carillion's new facilities and agreed deferrals outlined above improve Group committed headroom throughout 2018 by between approximately £170m and £190m. Further details are set out in the Appendix.

The Group continues to assess a broad range of options for optimising its capital structure and to this end is fully engaged in constructive dialogue with stakeholders.

Disposals

Carillion has signed heads of terms with Serco Group Plc ("Serco") for the disposal of a large part of its UK healthcare facilities management business for an agreed price of £50.1m, subject to a limited working capital adjustment. Carillion has agreed to give Serco a period of exclusivity to provide the parties with time to finalise a business purchase agreement, which Carillion and Serco are aiming to sign in the next few weeks. The transfers of contracts pursuant to this disposal are each subject to receipt of third party consents, and, if required, shareholder approval. It is intended for the contract transfers to take place on a phased basis, with the aim of receiving the bulk of the proceeds during the first half of 2018. Further details will be published once the business purchase agreement is signed.

Carillion intends to dispose of the remaining contracts in its UK healthcare facilities management portfolio during 2018.

While Carillion is continuing to pursue the disposal of the Group's Canadian businesses, it is also evaluating whether a better result for the Group would be achieved by retaining for now certain of those businesses. The Group continues to target non-core disposals with aggregate consideration anticipated of over £300m by the end of 2018 and further announcements will be made in due course.

Work winning

Recent wins include:

· Gigaclear - £200m contract. Carillion telent, a 60:40 Joint venture with telent, has signed a contract with Gigaclear, the ultrafast pure fibre broadband company, to build a broadband network in Devon and Somerset. The contract is expected to generate revenue of up to £200m for the Joint Venture between 2018 and 2020, and will commence immediately.

· Dubai Creek Harbour - £105m contract. Following a pre-construction period, Emaar Properties has awarded Al Futtaim Carillion (AFC: a 50:50 Joint Venture) the contract to deliver Creek Horizon, a collection of premium residential apartments located at the Island District in Dubai Creek Harbour. The contract is expected to generate revenues of approximately £105m for AFC and work is underway, with completion scheduled for early 2020.

· Fallowfield - £71m contract. Following Carillion's appointment as preferred bidder (announced on 12 April), Carillion has signed a contract with the University of Manchester to design and build Phase 1 of its Fallowfield Student Residences project. The project has an estimated construction cost of £71m and work is underway.

Outlook and guidance  

There is no change to 2017 guidance as set out in the interim results announcement on 29 September.

Commenting Keith Cochrane, Interim Chief Executive, said:

"Today we are announcing progress on a number of fronts and whilst our customers and creditors continue to be supportive, much remains to be done. We remain focused on executing our disposals and cost savings programmes while continuing our discussions with our lenders and other stakeholders to explore further ways of strengthening Carillion's balance sheet."

This and other Carillion news releases can be found at www.carillionplc.com

This announcement contains inside information.

For more information

Kellie McAvoy, Head of Investor Relations, or,

John Denning, Director Group Corporate Affairs, Carillion plc +44 (0) 1902 906333

Teneo Blue Rubicon

Charles Armitstead/Haya Herbert-Burns +44 (0) 207 420 3197

Appendix

Key terms of the finance documents

The key terms of the new committed facilities are as follows:

· The senior secured facility matures on the earlier of 27 April 2018 and five business days prior to the filing of the 2017 annual accounts for the Group.

· The senior unsecured facility matures on 1 January 2019.

· A cash margin of 8% plus LIBOR and 10% (and 12% following termination of the senior secured facility) plus LIBOR will be payable on the secured and unsecured facilities respectively.

· The financial covenants in the new committed facilities will be on the same terms as the Group's existing revolving credit facility agreement.

· The new committed facilities contain covenants typical for this type of facility, including mandatory prepayment terms and restrictions on incurrence by members of the Group of indebtedness and on security subject to limited exceptions, as well as enhanced information rights.

· Certain upstream guarantees from Carillion's subsidiaries are also expected to be provided in respect of the new committed facilities and certain of the Group's existing financing arrangements.

The surety providers' commitment to provide contract performance bonds is split across two facilities: a £40m UK bonding facility, and a £40m Canadian bonding facility, both available until 31 January 2018. Bonds issued under the UK facility will be cash collateralised upon repayment of the new committed loan facilities.

The key terms of the deferrals agreed by the other key creditors are:

· The deferrals on the private placement notes involve a deferral of c£16m private placement notes maturing on 27 November 2017. £49m private placement notes maturing on 28 September 2018 may also be deferred to January 2019 if the new committed facilities have not been repaid before 28 September 2018. The margin on deferred notes increases to LIBOR plus 10% from the time of their deferral.

· In relation to six of the Group's defined benefit pension schemes, the deferral of employer pension deficit recovery contributions until as late as January 2019, that would otherwise have been payable between August 2017 and March 2018, will have a cash margin of LIBOR plus 8%.

This and other Carillion news releases can be found at www.carillionplc.com

Cautionary statement

This announcement may contain indications of likely future developments and other forward-looking statements that are subject to risk factors associated with, among other things, the economic and business circumstances occurring from time to time in the countries, sectors and business segments in which the Group operates. These and other factors could adversely affect the Group's results, strategy and prospects. Forward-looking statements involve risks, uncertainties and assumptions. They relate to events and/or depend on circumstances in the future which could cause actual results and outcomes to differ materially from those currently anticipated. No obligation is assumed to update any forward-looking statements, whether as a result of new information, future events or otherwise.