Contractor Mansell is closing its loss-making maintenance arm as part of a plan to float on the stock exchange.

This decision will mean the closure of four offices in Glasgow, Warrington, Cheshire, Reading, Berkshire and Leeds. The £492m group has yet to finalise details of redundancies at the division, which employs 400 staff.

Chief executive Philip Cleaver said the firm intended to sell the arm, or transfer some contracts to rivals. He said the process would take six months.

Cleaver said Mansell would retain about £8m of the division's £32m turnover, which would be transferred to the services division. The services arm will handle repairs and small works rather than core maintenance jobs.

The decision to close the division follows a decline in business. Turnover at the southern maintenance arm dropped 50% last year to £6m. Cleaver said this was because of a reliance on subcontractors.

The imminent closure of the division had led to the departure of operations director Paul French who has moved to Benson to start a maintenance arm.

Cleaver said: "Fundamentally, the division is loss-making. It's been frustrating for the past two years because the excellent results of the core business have been offset by difficulties in maintenance.

"Ultimately the change will mean the business will be much stronger. It's important to us to have a very strong and clean business." Cleaver emphasised that the rest of the group, which also spent £1m on restructuring last year, was performing well and was taking advantage of an increase in partnering and framework deals. He said: "We have £1bn of potential work – the work we have in hand is the strongest it has ever been." Cleaver said the group was in the detailed planning phase for flotation, which could happen in the next two years. He said: "It's a lengthy process and requires a whole lot of planning." The group reignited flotation plans at the start of the year by appointing a City dealmaker, Eric Anstee, as chairman. Anstee demerged utilities firm the Energy Group from Hanson in 1997.