Galliford Try is about to tap investors for £150m after taking a significant hit on a joint venture it was working on with the collapsed construction group Carillion.
Shares in Galliford fell 19% after the FTSE 250-listed company said that it will book a £25m exceptional charge in its half-year results to cover cost overruns on the complex Aberdeen bypass project, of which Carillion had been a key partner.
The company said it would be looking to raise £150m of new equity over the coming weeks to cover “additional financial obligations arising from this contract”.
According to the FT Peter Truscott, chief executive described the fall in share price as a “fairly natural reaction”, adding, “but the important thing is to look at the fundamentals”. “We’ve seen progress in all our businesses,” he said.
The planned capital raising was important in order to be able to demonstrate “a really solid balance sheet to shareholders and retain enough cash to grow the housing business”, he added.
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