Buy tips Pennon (PNN), Costain (COST) and John Laing (JLG) can breathe a sigh of relief. The long-beleaguered Greater Manchester Waste private finance initiative contract – involving all three companies – should be terminated by September. The 25-year deal was signed in April 2009.
The contract was run through joint ventures between John Laing, Viridor – a subsidiary of Pennon – and chemical company Inovyn. Costain worked on a sub-contract for Viridor Laing. The authority has been seeking discounts on the contract and all three companies had been hit financially. At its most recent full-year results Costain revealed it took £15.1m in costs and provisions against the contract.
As part of the termination, Viridor Laing will move under the ownership of the Greater Manchester Waste Disposal Authority, reducing the value of John Laing's Manchester waste investments by £25.5m. The two investments represented 8 per cent of John Laing's £1.2bn investment portfolio at the end of December 2016. However, management said the alternative could have been long and costly legal proceedings with an uncertain outcome for the valuation of its two investments.
