Kier Group negotiating sale of its housing maintenance business in a bid to reduce debt
Kier Group, the troubled outsourcing company, is nearing an agreement to sell its housing maintenance division.
The deal, if agreed, would be part of a previously announced plan to shore up the balance sheet of the construction and building services provider by selling non-core assets.
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The company’s recent struggles continued last week as chief executive Haydn Mursell was forced to step down after more than four years at the helm.
Mursell's departure came after just 38 per cent of Kier’s shareholders opted to participate in a rights issue in December despite the shares being issued at a substantial discount to their market price. Underwriters were forced to step in to support the company’s bid to raise £250m.
Public disclosures revealed that influential shareholder Woodford Investment Management, led by Neil Woodford, increased its stake by about £7.28m following the chief executive's exit, suggesting the high profile investor sees a stronger future for the company without Mursell.
Kier’s share price has fallen by more than 51 per cent to 524p in the past 12 months. Other outsourcing companies, including Interserve and Capita, have also seen their share prices slump in the face of continuing difficulties in the industry following the high profile collapse of Carillion last year.
The sale of the housing maintenance division, on which Deloitte is representing the company, is expected to raise between £20m and £30m.
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As part of its plan to sell non-core divisions, Kier sold its Australian road management and maintenance business last month for a headline price of £24m in a bid to reduce its debts.
Kier declined to comment.