Kier property arm ‘targeted by US private equity firm’
American private equity firm Lone Star is said to be one of the bidders in the race to buy parts of Kier Group, as the embattled contractor looks to raise money.
Kier is looking to sell off “non-core” parts of its business, with its housebuilding division, Kier Living, up for grabs.
Read more: Kier suspends dividend and unveils plan to cut 1,200 jobs
The struggling outsourcer staggered to a £245m loss in its latest full year, with net debt of £167m.
The sell-off comes as part of new chief executive Andrew Davies’s attempt to turn the company around. Since his arrival in March this year, he has announced 1,200 job cuts as part of a wider cost reduction plan.
Lone Star’s interest was first reported by the Sunday Times.
But last week, it was reported Kier’s lenders are trying to offload its debt to hedge funds, in a sign they think the risk of another corporate collapse in the embattled sector is increasing.
HSBC and other lenders are reportedly marketing the debt for as little as 70p in the pound, as they try to cut their losses in case the firm meets the same fate as fellow outsourcer Carillion.
Hedge funds, who specialise in distressed debt, are circling the sale in the hope they can use the debt to take control of the firm.
Kier is one of the country’s biggest builders of roads, schools and railways, and carries out a significant amount of work for the government.
Read more: Kier lenders ‘try to offload outsourcers’ debt’
This includes two contracts worth £1.4bn to design and build major railway tunnels beneath Northamptonshire, which were originally part of a three-way joint venture including Carillion.
However, when Carillion collapsed early last year, Kier and French construction company Eiffage took on 50 per cent of the job each.
(Image credit: Kier)