Costain to appeal on Peabody ruling

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The Independent Online
COSTAIN, the housing and construction group, is to appeal against a US court ruling that prevents it from selling its Australian mining business to Altus Finance, a subsidiary of the French bank Credit Lyonnais.

Peter Costain, the chief executive, said: 'We firmly believe that we have acted entirely in the best interest of shareholders, and we shall continue to do so.' The appeal will take three weeks.

If the process goes beyond that, Mr Costain said: 'It is unlikely the Altus deal will be capable of being completed,' although he would not say why.

Peabody had agreed to buy the business for dollars 200m (pounds 138m) plus the assumption of dollars 102m debt, but then Costain said it had agreed to sell the business, plus some Australian property assets, to Altus for dollars 245m plus debt.

The court judgment reveals that Costain warned the court that it would face 'financial harm' if it was prevented from selling the business to Altus until it got shareholder approval for the Peabody deal. And it says that, before either deal was agreed, Costain's banks were becoming 'increasingly concerned'.

Costain's debts, including off-balance sheet, are pounds 344m. It is likely to make substantial provisions in its 1992 accounts, which means net assets will fall below the pounds 276m shown in its 1991 accounts.

The judgment reveals that Peabody also expressed an interest in acquiring Costain's US coal business, but a spokesman said yesterday its offer was not accepted.

Bouygues, the French construction group, also expressed an interest in buying the entire Costain group. This was not pursued and its advisers, Credit Lyonnais, instead bid for the coal business.

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