Galliford Try plans £150m equity raise to support housing ambitions amid Carillion fallout

The fund raising plan comes after the group reported an additional £25m provision on the back of Carillion’s collapse, with whom Galliford Try and Balfour Beatty had a significant roads joint venture on the Aberdeen Western Peripheral Route contract ("AWPR").

Galliford Try – posting half-year results to 31 December 2017 – said over-run costs on the AWPR – compounded by the compulsory liquidation of Carillion – have increased the group’s total cash commitments on the project by in excess of £150m.

It said that while it has sufficient resources to meet its obligations, it would mean diverting capital away from its housing and partnerships businesses, hence the plan to raise £150m of new equity capital “to strengthen further the group’s balance sheet and ensure that the group’s businesses can continue to pursue their respective growth opportunities”.

Galliford Try’s partnerships and regeneration division – which includes £3.5bn of joint ventures with housing associations – reported a 55 per cent increase in revenue in the half-year.

The company said: “The group has sufficient financial resources to meet its obligations, including the estimated impact of Carillion’s liquidation. However, this would involve diverting capital away from the Linden Homes and partnerships and regeneration businesses, thereby reducing their ability to capitalise on the material growth opportunities these businesses would otherwise be well positioned to exploit.”

Rothschild is acting for the company on the capital raising, which has been fully underwritten by HSBC and Peel Hunt on a standby basis.

The company has £550m of debt facilities, comprised of a £450m revolving credit facility which matures in 2022 of which £100m was drawn as at 31 December 2017 and £100m of private placement notes due 2027.

It said it will continue with its current gearing policy of year end net debt to net assets of no greater than 30 per cent, and that its defined benefit pension obligations are well provided, with a balance sheet liability of just £2.7m at December 2017 on a fair value of plan assets of £248m.

It decided to bring forward a planned increase in dividend cover to 2x pre-exceptional earnings per share, while declaring an interim dividend of 28p per share (H1 2017: 32p).