British multinational infrastructure group, Balfour Beatty, has announced it has sold a further 7.5% of its stake in Connect Plus.
This has come very soon after the original announcement about its stake in the company that operates the M25 orbital motorway, when Balfour Beatty confirmed 12.5% of its share will be sold.
An unconditional right to sell the stake to funds managed by Dalmore Capital Ltd (Dalmore) has been put in place, and funds managed by Equitix Investment Management Ltd (Equitix) have the right to acquire this stake in priority to Dalmore for an identical price between now and 13 March 2018.
The sale is for a cash consideration of £62 million which is higher than initial valuations from Directors in June last year.
It means that profit on disposal is expected to be £32 million – money that will pay down borrowings this year.
With this transaction, and the one that saw Balfour Beatty sell 12.5% of its share in Connect Plus, the expected profit on disposal is £85 million, with year-end net cash forecast to stay around £103 million because the money from the sale of the 7.5% won’t be received until some time this year.
When the two transactions are combined together, it changes the Board’s expectations for Group profit before tax and year end net cash for 2017, with estimations now above those included in the Balfour Beatty Trading Update that was released in December 2017.
Connect Plus is a significant consortium that is made up of Balfour Beatty, Egis Road Operation UK and Edge Orbital Holdings Ltd – a unique partnership with strength in highways asset care including finance, design, build and maintenance, as well as day-to-day operation.
The consortium is responsible for managing and improving what is one of the busiest motorways in Europe and although Balfour Beatty will have less of a stake, the Group’s expertise will still be valuable for this 440km stretch of motorway.