Money

Ferrovial to sell UK support services unit separately


Ferrovial, the Spanish infrastructure group and part owner of Heathrow airport, has decided to sell its global support services division separately from its UK branch Amey, a move that underscores the problems facing the British outsourcing sector.

In December Ferrovial appointed the investment bank Goldman Sachs to hunt for a buyer for its global support services business, which includes Amey, as part of a wider strategy to narrow its focus on transport infrastructure.

But the sale has been held back by its problematic UK division, which remains in dispute with Birmingham city council over a lossmaking private finance initiative contract.

Ferrovial has decided to carve Amey, which employs about 19,000 people in the UK, out of the wider sale until it has managed to exit the Birmingham deal, according to news first reported in the Spanish newspaper El Confidencial.

The decision will leave it free to sell the rest of the business to prospective buyers, which include private equity firms such as PAI Partners, KKR, Blackstone, and Advent, according to people familiar with the situation.

It hopes to agree a deal as soon as this summer and to put Amey on sale when the Birmingham dispute is resolved. Ferrovial declined to comment.

The troubles of Amey, which provides everything from maintenance for the Ministry of Defence, transport for prisoners for the Ministry of Justice and private finance initiative projects for schools, come as Britain’s support services and construction providers fight for survival in the wake of Carillion’s collapse last year.

Interserve is in the hands of its creditors after it ran out of cash while its rival Keir was forced into a heavily discounted rights issue at the end of last year.

The decision by Ferrovial to sell Amey separately follows a €774m writedown by the Spanish group on Amey, which has left the company with a book value of just £88m. The writedown was largely a result of the long-running legal battle with Birmingham council over its troubled £2.7bn deal to maintain its 1,600 mile road network.

Last year the Court of Appeal ruled in favour of the council when Lord Justice Jackson said the company had applied “an ingenious new interpretation of the contract” that left some roads and paths unrepaired.

Amey has offered the council between £200m and £300m to walk away from the deal, but the local authority has so far refused, according to people familiar with the situation.

Amey was also fined an estimated £48m by Birmingham council over a failure to repair two sets of bollards.

The rest of Ferrovial’s support services business involves divisions in Spain, UK, Chile, US, Canada, Poland and Australia, where it operates rigs for oil and gas clients, runs defence facilities management services and until 2017 ran an offshore detention centre for Australian asylum seekers.



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