Contracts, etc.

Carillion PLC
22 June 2000


Financial close achieved on new £800 million GCHQ project

Carillion, the leading construction to services company, is to
begin construction on the new Government Communications
Headquarters, in Cheltenham - the largest facility to be built
under the UK's Private Finance Initiative - having concluded
the financial arrangements and signed contracts.

Carillion, along with partners Group 4 and BT, have formed
Integrated Accommodation Services (IAS), the Special Purpose
Company which will manage the concession to finance, design,
build, maintain and service the new GCHQ over a 30 year
concession period. The total net present cost to the
Government of this project over the concession period will be
some £800 million.

Carillion will build the new GCHQ, under a three year contract
worth around £330 million, and be responsible for maintenance
work over the life of the concession with an estimated value
of over £40 million.  In addition, Carillion has a 40 per cent equity
share in IAS.

The capital cost of the project is being funded through a £407
million Senior Bond investment, guaranteed by Financial
Security Assurance (UK) Limited, which has been managed by
Deutsche Bank.  In addition, £23m of Secured Mezzanine Bonds
are subscribed by Abbey National, together with £23m of
subordinated loan stock by the IAS Shareholders.

Securing this project further strengthens Carillion's position
as the UK leader in PFI - a position recognised at last week's
PFI Awards when Carillion won the top award for the 'Greatest
Private Sector Contribution to PFI'.

With the addition of GCHQ, Carillion has now closed 14 PFI
deals involving construction contracts worth some £860 million
and management and maintenance contracts worth over £650
million, to provide the assets and services involved over the
concession periods. In addition, Carillion's equity
investments in PFI concession companies are expected to
generate turnover approaching £1,600 million.

In the past six weeks Carillion has also signed the contract
for a £170 million tram project in Nottingham and was selected
as preferred provider for a £30 million magistrates court
facility in Manchester.

Euan McEwan, Carillion executive director responsible for
Carillion Private Finance says, 'GCHQ is one of the largest
PFI concessions to be awarded and today's contract signing is
a landmark for PFI and a tribute to the hard work of the IAS
team in bringing the negotiations to a satisfactory
conclusion.

'By 2003, GCHQ will have a superb facility which will provide
excellent working conditions and provide the best value for
money solution for replacing the existing out-dated
buildings.'

Notes

Carillion's PFI projects comprise -

Already financed, under construction or complete
HMP Altcourse, Merseyside
HMP Rye Hill
Rainsbrook Secure Training Centre
Medway Secure Training Centre
M40
A55
Darent Valley Hospital
Princess Margaret Hospital
Glasgow Southern General Hospital
North Staffordshire Acute Psychiatric Facility
Derwent Hospital
Nottingham Express Transit
Avery Hill Student Accommodation
GCHQ

Project at preferred bidder stage
Manchester Magistrates Court.

Financial adviser for this project was Bank of America and
legal adviser was Ashurst, Morris, Crisp.

For further information contact John Denning or John Davies on
01902 316444