Contractor continues with plan to refocus on regeneration and drop ‘non-core’ elements

Contractor MJ Gleeson is set to receive up to £40m for its engineering arm as the board sells off peripheral businesses to refocus on regeneration.

A source close to Gleeson said that a preferred bidder would be selected by the end of next week. The deal is expected to be finalised in six to eight weeks. It is believed that two companies are in the running.

The sale is a key part of the group’s strategy to focus on housing regeneration. This was a result of problems in the building arm, which posted a loss of £16.6m before it was bought out by management last summer.

Gleeson also decided to sell other “non-core” businesses, including the concrete repairs division. This was sold to management for £3m earlier this month.

The strategy was led by chief executive Terry Massingham, who resigned this week.

Massingham did a good job getting the new strategy in place

Industry source

Paul Wallwork, finance director, has replaced Massingham temporarily but the search for a permanent chief executive is under way. An industry source said: “Massingham did a good job getting the new strategy in place but decided to stand aside so somebody who is a bit more of a hands-on operator can take over.”

The trading statement comes less than two months after Gleeson issued a profit warning. Dermot Gleeson, the chairman, said at the time that this was the result of radical change being “inevitably disruptive”.

The statement fleshed out the warning. It said that the non-regeneration parts of the Gleeson Homes division performed poorly in the second half of the financial year, which ran to 30 June. The statement said there was a “need for substantial write-downs” because of problems on a small number of sites. This resulted in an overall loss for the business in the last financial year.

Net debt has, however, fallen from £102.3m on 31 December to £18m at 30 June.