Costain coal fetches just pounds 28m

Costain, the troubled international engineering and construction group, last night announced the long-awaited sale of its US mining business for a fraction of the hoped-for price and issued a profits warning as it revealed that Alan Lovell had resigned as chief executive.

The company said it was selling US Coal to Rencoal, an American mining group for pounds 28.6m. Analysts had expected up to pounds 50m from the sale, but Costain said US Coal would report losses pounds 11m worse than expected because of "production difficulties" caused by "adverse geological conditions" in September and October. Losses in the Middle East construction business will also be pounds 4m more than forecast, Costain warned.

Costain is also raising pounds 23.4m from the sale of its one-third interest in the Spitalfields development in London to Metacorp, a Malaysian group 23 per cent-owned by Intria, owner of a 40 per cent stake in Costain.

Mr Lovell said he was stepping down following the final disposals of non-core assets: "However, in order to ensure a smooth transition, I have agreed to stay with the group until my successor has been appointed."

In another boardroom change, Sir Christopher Benson will be replaced as chairman by Firdaus bin Shafli, currently joint deputy chairman.

Last month shares in Costain were suspended pending clarification of the group's financial position and further details about asset disposals.Trading in the shares is unlikely to resume until the end of the month.