Costain seeks investment partner to finance PFI work

Costain is seeking an investment partner for PFI work to ensure that its financial difficulties do not hamper its ability to compete in the sector.

The contractor last Friday reported a swing back to profit in its interim results, despite continuing losses in its building division. Andrew Wyllie, Costain’s chief executive (pictured), said the company was now seeking a “strategic partnership” with a secondary infrastructure fund to help finance PFI deals. He also announced that Costain would issue more shares to strengthen its balance sheet.

Tony Bickerstaff, group finance director, said: “We looked at the possibility of selling our equity portfolio, but didn’t want to do that. We are seeking a partnership that will give us funding for both equity and new PFI schemes.”

Costain reported a pre-tax profit of £8m for the six months to June 2007, compared with a loss of £20.7m in the same period last year. Turnover fell slightly to £430m from £436.2m.

We looked at the possibility of selling our equity but didn’t want to do that

Tony Bickerstaff, Costain

Its results were strengthened by a good performance in its civil engineering division. This recorded an operating profit of £9.9m. Its building arm, which contributed to a £61.7m loss in its full year accounts in 2006, improved but still recorded an operating loss of £3.3m.

The company, which confirmed it was planning a rights issue to raise £60m, has recently reorganised its business into nine sectors and closed its international division.

Costain continued to suspend dividend payments, but said it expected to be able to issue a dividend of 0.5p with its full year results if the rights issue was successful.