Cash will be used to cover soaring Aberdeen bypass costs
Galliford Try has completed a rights issue to cover spiralling costs on the problem-plagued 拢745m Aberdeen Western Peripheral Route project.
The firm this morning confirmed it had raised 拢157.6m in a 1 for 3 rights issue of shares discounted by 33% of their present value, which was underwritten by its banks.
The contractor revealed the proceeds would be used to cover soaring costs in relation to the bypass, which it is building with remaining joint venture partner Balfour Beatty. The pair鈥檚 other joint venture partner Carillion went bust in January.
Galliford Try said the soaring costs had been compounded by Carillion鈥檚 implosion, with the firm鈥檚 total cash commitments to the project increasing by more than 拢150m 鈥� although it said this was 鈥減rior to any recoveries鈥�.
Galliford Try revealed in its results last month that it had taken a further 拢25m hit on the scheme on top of losses it announced on the job last year.
Balfour Beatty鈥檚 2017 results also confirmed that Carillion鈥檚 implosion in January had cost the firm, with the contractor taking a 拢44m hit on the job.
Following Bill Hocking鈥檚 appointment to the position of chief executive of the firm鈥檚 construction business, the group has changed its tendering policy and no longer bids lump sum, fixed price jobs.
Peter Truscott, Galliford Try chief executive said: 鈥淲e see excellent opportunities and demand for both our private and affordable homes businesses and our construction business continues to benefit from the current and planned investment in the nation鈥檚 infrastructure.
鈥淭he rights issue proceeds will strengthen the group鈥檚 balance sheet and ensure that the group鈥檚 businesses are in a position, with the appropriate capital, to deliver on their respective growth opportunities.鈥�
The construction business鈥檚 operating profit margin increased to 0.9% from 0.4% in the second half of 2017. The order book has been maintained at 拢3.5bn
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