June 14, 2019 / 8:22 AM / 3 months ago

Kier shares drop 13% after report on homebuilding sale

June 14 (Reuters) - Shares in troubled Kier dropped 13% on Friday after a media report that the construction and services group was looking to sell its housebuilding unit as part of a review to cut debt and simplify its structure.

Kier issued a profit warning last week which sent shares down 40% to their lowest in two decades as investors speculated it may cut dividend payouts and again seek to raise more funds after a failed share issue last year.

The Times reported bit.ly/2XHb7Ap on Friday that Kier had sounded out advisers on the possibility of selling the housing division at a value of between 100 million and 150 million pounds.

Analysts at Liberum said that the amount quoted would be “disappointing” for the whole business and compared to the company’s own assessment of the value of the business in fiscal 2018 of 291 million pounds.

“However, events are moving fast and disposals are likely to be complicated, given the JVs (joint ventures) in Property and Residential, they will be very dilutive,” the brokerage said.

Several big British building firms have suffered since regulators tightened rules for contractors operating in the public sector after last year’s collapse of Carillion and the slide of another peer, Interserve, into administration in March.

Another housebuilder, Galliford, late last month rejected a bid from Bovis to buy its Linden Homes and Partnerships & Regeneration businesses in exchange for new Bovis Homes shares, judging it was not in the interests of all shareholders.

Shares in Kier were down 13.7% at 175 pence, making it the worst performer on the FTSE midcap index. (Reporting by Justin George Varghese in Bengaluru; editing by Patrick Graham)

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