JOHN LAING has announced a £72.5M rights issue to keep it afloat after selling its loss making construction business to O'Rourke.
Laing needs the money to replace cash reserves that were generated by the construction business and used to fund its housing and infrastructure investment operations.
It is also expected to sell £120M of property assets and stakes in privately financed infrastructure projects to boost its finances further.
The moves follow last week's announcement that Laing was selling its construction division to O'Rourke for a token £1, losing £30M on the sale.
The contractor is originally said to have expected £100M but the price was driven down as spiralling losses on the National Physical Laboratory project in Middlesex came to light.
Laing chairman Sir Martin Laing is stepping down from January next year. A spokesman for Laing said that he had decided to fall on his sword after presiding over a dramatic decline in his family's business fortunes over the last two years.
He will remain as a non-executive director and is the last remaining family member on the company's board.
Results published last week showed that Laing Construction had made an operating loss of £82.7M during the six months to 30 June, compared with losses of £19M in the corresponding period of 2000.
Construction losses dragged the Laing group into the red during the first half. Pre-tax losses were £50.4M on turnover of £611.6M compared with a profit of £27.5M on turnover of £803.5M during the first half of 2000.
Taking over Laing's construction business gives concrete specialist O'Rourke around 2,000 Laing construction staff and a business that has refocused on fee based and negotiated work rather than lump sum fixed price contracting.
It will also give O'Rourke access to Laing clients including airport operator BAA. Laing is BAA's only civil engineering framework contractor under its £500M annual construction programme.
O'Rourke is BAA's precast concrete framework contractor working at all of its airports.
The sale does not include the National Physical Laboratory job which O'Rourke refused to take over.
Instead, John Laing Services, the non construction part of the business, has brought in Bechtel to manage completion of construction work. Laing will also pay for further losses on that job and on 12 other projects.
'In respect of the other . . . contracts, John Laing Services Limited's specific responsibilities will include the rectification of defects, the control of project cashflows and the control of claims or potential claims arising out of any indemnified project, ' said a statement issued by Laing last week.