John Laing, the 150-year-old construction business, sold its property arm for £40m yesterday, completing its mission to raise £120m through asset disposals.
The division was bought by Kier Developments, a £91.6m joint venture set up between Kier Group and Bank of Scotland, five months after it was put up for sale. The proceeds will be used to pay down debt.
"We had been salami slicing Laing Property all the way until we got to a rump, which we sold yesterday," said Bill Forrester, the chairman who took over earlier this year. Including previous sales of other London properties, such as Laing's headquarters in Mill Hill and Portland Place, the group raised £66.3m, a £20.7m premium to book value.
Mr Forrester said the disposals had reduced the company's gearing to around 50 per cent from "well over 100 per cent", rescuing it from a "crisis situation". He added that the group expected to renegotiate its banking facilities by late summer.
The disposal brings Laing closer to its strategic repositioning as an infrastructure-investment group, working on private finance initiative-style projects.
Mr Forrester, who replaced the last family executive board member, Sir Martin Laing, denied that the group had decided to press ahead with selling its homes arm, worth around £300m. "It is not a probability but a possibility," he said. "There are no financial reasons to sell it other than that our infrastructure-investment business would benefit from the cash realised." A decision is expected next month.
Laing, which is not big enough in either housebuilding or infrastructure to run both businesses side by side, got into trouble last autumn after its construction division racked up heavy losses. Laing was forced to sell the business last September for just £1 after running into difficulties with two large construction projects – the Cardiff Millennium Stadium and the National Physical Laboratories.
Laing Property, which attracted more than 70 bidders, contributed profit before interest and tax of £5m. The sale included a 50 per cent stake in Absolute, a subsidiary with a £265m portfolio of developments extending along the M3 and M4 motorways.Reuse content