Costain’s shares plummet after it announces whopping £53.5m National Grid payment
Construction group Costain has announced it expects to pay £53.5m to National Grid next month, resulting in its shares plummeting 7.64 per cent on the FTSE All-Share yesterday afternoon.
It is handing over the money, after the two companies fell out over a contract to upgrade gas compressor stations in Peterborough and Huntingdon.
In a trading update to the London Stock Exchange, Costain said an adjudicator had sided with the firm in three out of its four compensation disputes with National Grid.
However, as it did not win all points, it expects to have to make a payment of £53.5 million to National Grid by January 2022
Despite the setback, Costain still expects year-end net cash to beat market expectations at around £100 million. It does not expect the settlement to affect its banking arrangement or business plan.
Instead there will be an associated charge to the income statement for its current financial year.
The company said: “We are making good progress on our journey to transform the business, reduce risk and improve returns. This, combined with the considerable government investment in infrastructure, allows us to look forward with confidence.”