Outsourcer Amey agrees terms for £300m deal to escape Birmingham roads contract
Contractor Amey is close to reaching a £300m agreement that would see it pay its way out of a maintenance contract for Birmingham’s 1,600-mile road network, it is reported.
Read more: Amey 'offers £300m' to Birmingham city council to escape road contract
Amey’s deal with Birmingham City Council and the government will see it pay £215m to quit the arrangement, Sky News said.
That money will come in the form of £130m upfront in cash and another £15m in two further payments, the first of which is due in September, the publication said.
Amey and its owner, Ferrovial, would then pay another £55m over five years.
Birmingham City Council will keep £85m it has collected in penalties and deductions from Amey so far, however.
The £300m agreement to quit the road maintenance contract should help Amey avert insolvency, according to Sky.
The outsourcer upped the amount from a previous rejected £245m offer, it is claimed.
Amey, which employs 19,000 people, has been trying to buy its way out of the £2.7bn 25-year deal for some time.
Ferrovial wrote down £670m of the value of Amey earlier this year, showing the downward pressure on large British outsourcers following the collapse of Carillion.
Lenders, which reportedly include the Bank of Ireland, Nationwide Dexia and ING, must approve the deal before Amey can exit the contract.
EY is advising lenders while Lazard is advising Amey. Duff & Phelps is advising Birmingham City Council.
“We are encouraged by recent progress and appear to be arriving at a deliverable solution guaranteed by Amey,” a spokesperson for the outsourcer said in an email to City A.M.
Read more: Amey eye Birmingham council contract exit
“The next few days are critical to finally concluding this issue.”