December 13, 2017 / 8:29 AM / 10 months ago

UPDATE 1-Debt-laden Carillion secures deal to sell part of UK healthcare unit

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Dec 13 (Reuters) - Troubled British construction firm Carillion said on Wednesday it had reached a deal to sell a large part of its UK healthcare facilities management business to outsourcing group Serco, helping it cut its debt by 41.4 million pounds.

The company’s shares, which have slumped more than 90 percent since a profit warning in July, rose as much at 10 percent in early trade on Wednesday. They traded at 18 pence at 0813 GMT.

Carillion, which has said it was heading towards a breach of debt covenants and needed fresh capital, had said it would exit its UK healthcare and Canadian businesses to help raise more than 300 million pounds by the end of 2018 from disposals.

The sale, for about 47.7 million pounds ($63.55 million), includes a portfolio of healthcare facilities management contracts and related ancillary contracts and assets. The firm said 15 sites would be transferred to Serco on a phased basis.

The firm had said in September said it intended to exit the business and then announced it had a preliminary agreement for selling a large part of it to Serco for 50.1 million pounds.

Carillion said net disposal proceeds of 41.4 million pounds would be used to prepay of part of a 140 million pound credit.

“I am pleased we have been able to successfully conclude this transaction which will contribute to our efforts to reduce net debt,” Carillion’s Interim CEO Keith Cochrane said.

Analysts estimate Carillion’s debts including provisions, pensions and accounts payable at about 1.5 billion pounds.

Carillion is fighting for its survival after costly contract delays and a downturn in new business at the company, which handles major infrastructure projects for the British and other governments. Its CEO quit in July and it issued its third profit warning in five months in November.

Lazard & Co is acting as lead financial adviser and sponsor to Carillion for the healthcare unit sale.

$1 = 0.7506 pounds Reporting by Noor Zainab Hussain in Bengaluru; Editing by Edmund Blair

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