12th May 2014 08:17
LONDON (Alliance News) - Construction firm Carillion PLC and engineering-support services firm Babcock International Group PLC on Monday said they had been selected as preferred bidders by Network Rail for its GBP25 billion investment programme to upgrade the UK's ageing railway lines.
Carillion said it has been selected as one of three preferred partners to renew more than 7,000 kilometres of track. The regions in which Carillion will deliver renewals include the Midlands into the North West, and from Kings Cross to the North East of England. This work is expected to be worth approximately GBP100 million to Carillion over a five-year period, it said.
The deal is a welcome boost to the struggling FTSE 250 firm, which was hit hard by the financial crisis. Last week it said it expects to resume revenue growth in 2014, including the resumption of revenue growth in UK construction, which was hit particularly hard by the downturn, in the full year.
Carillion expects to sign the contract in June.
Meanwhile, Babcock said it has been selected as one of the preferred bidders for Network Rail's plain line track works. The regions in which Babcock will deliver renewals include Western Wales and Wessex, Scotland and London North Western South. Plain line track has no points or cross-overs.
Babcock's contract is worth around GBP200 million over a five year period.
French construction group Colas SA is the third preferred bidder. Its deal, for work across Kent, Sussex and Anglia, is worth GBP75 million over five years.
In a separate note, Carillion said two of its joint ventures with infrastructure support business Amey PLC have been selected by the Defence Infrastructure Organisation for two Next Generation Estate contracts potentially worth up to GBP1.7 billion including additional services and extensions.
These contracts form part of the Defence Infrastructure Organisation's (DIO) Next Generation Estate Contracts programme to maintain and upgrade Defence infrastructure.
A 67:33 joint venture - where Carillion holds the 67% stake - has been awarded the National Prime Housing contract that is estimated to be worth GBP625 million over the initial five-year contract period, which can be extended by a further five years subject to approval.
Under this contract, the joint venture will provide a range of hard facilities management services, including routine maintenance, occupancy management, furniture installation, energy efficiency services, statutory inspections and improvements for more than 49,000 military homes throughout the UK.
In addition, the company's 50:50 joint venture with Amey has been awarded the Scotland and Northern Ireland Regional Prime contract, which is estimated to be worth GBP150 million over the initial contract period of five years. Again this can can be extended by a further five years, subject to approval.
Under this contract, the joint venture will provide a wide range of hard facilities and asset management services across 30 key sites including RAF Lossiemouth, RAF Leuchars and Kinloss Barracks, Carillion said.
Carillion shares were quoted up 1.7% at 367.32 pence Monday, making it one of the biggest gainers on the FTSE 250. Babcock shares were quoted down 0.4% at 1,218.00p.
By Anthony Tshibangu; [email protected]; @AnthonyAllNews
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