Skanska takes stake in Costain

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The Independent Online
Costain, the troubled construction group whose shares were suspended almost a year ago, completed its long-awaited refinancing yesterday in a complex deal which could lead to a takeover by Skanska, the Swedish construction group.

The deal will also see Peter Costain, the group's chairman, step down from the board after presiding over what has become one of the longest- running corporate disasters.

Costain is raising pounds 47.5m through an open offer under which Skanska will emerge with a 7.6 per cent stake. Skanska has been granted call options over a further 144 million shares, exercisable within three years. If it exercises all these options it would hold a 40 per cent stake in Costain and would be required to make a full bid.

The announcement of its results for the year to December 1996 as well as its interim results for the six months to June will enable the suspension on the shares to be lifted. They were suspended at 46p last November. Costain said yesterday that any bid from Skanska would be at least 50p per share.

The proposed 1-for-1.6 open offer is priced at 40p. Skanska has agreed to underwrite pounds 10m of shares. The company's Far Eastern backers and its bankers are taking up the remainder.

Costain recorded losses of pounds 40m in the year to December 1996 before pounds 12.3m of exceptionals. In the six months to June it made a loss of pounds 3.7m.

The company said its primary objectives were now to return the group to profitability, to establish a sound balance sheet and to focus on its UK engineering and construction operations.

- Nigel Cope