Carillion reveals two Middle East hospital contracts worth £360m

 
Oliver Gill
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Tour of Oman - Stage One
Carillion has a 50:50 joint venture partnership in Oman with the Zawawi family (Source: Getty)

Carillion today announced two contracts in Oman that could net the troubled contractor hundreds of millions of pounds.

The London-listed firm has signed one contract worth £240m and is due to sign a second worth £120m to build hospitals in the region.

Both contracts will be awarded to Carillion Alawi, a 50:50 joint venture with local business group the Al Zawawi family.

Carillion previously owned a 100 per cent economic interest in Carillion Alawi, but sold such an interest to the Al Zawawi family at the end of September for £13m. Today's announcement raises the prospect of the contractor netting a further £29m in deferred cash consideration from the sale of its stake, something that is dependent on the joint venture's performance.

The first signed letter of award is with the Oman Ministry of Health to design and build the New Sultan Qaboos Hospital in Salalah.

The second letter of award is due to be "signed shortly" by the same joint venture to build a hospital in Khasab. The contract is on similar terms to those for the Salalah award and would have an estimated value of £120m to the joint venture, Carillion said.

Read more: Exclusive: Carillion locked in £200m Qatar FIFA World Cup contract row

Both awards will provide a boost to Carillion, which has endured a tumultuous year after over £1bn of contract write-downs. Most of the firm's stock market valuation has been wiped away and it has entered into challenging conversations with its lending syndicate in the hope of reducing a cumbersome debt pile.

Lenders have committed to £140m of short-term funding, while Carillion has pledged to flog non-core assets and right-size its operations.

Read more: Carillion shares leap on UK healthcare sale update

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