Published: Sun, January 14, 2018
Markets | By Rosalie Gross

Carillion bosses make last-ditch plea for rescue

Carillion bosses make last-ditch plea for rescue

Carillion is a major supplier to the Government and key contractor in the first phase of building the £56 billion HS2 rail line, but has seen its share price plunge almost 80% in the past six months after making a string of profit warnings and breaching its financial covenants.

EY, the accountancy firm, had been placed on standby to act as administrator to Carillion.

"The Government knows the disastrous consequences of a Carillion collapse so is doing all it can to avoid that happening".

Carillion also has major contracts to supply facilities management at 83 military sites in Scotland, as well as a 28-year contract managing the "elderly beds facility" at Glasgow's Queen Elizabeth University Hospital. "The collapse of Carillion could provoke a serious crisis".

Carillion had 924 million pounds of long term debt as of June 2017.

"If the government is forced to institute a rescue package they need to also ensure that the supply chain is fully protected".

As well as its Scottish projects, Carillion is a major supplier to the UK Government and a key contractor in the first phase of building the £56 billion HS2 rail line.

The company is a major supplier to the Government, maintaining prisons across the country and managing around 900 schools.

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Its share price plummeted 90 per cent after announcing its first profit warning in July a year ago.

The rescue plan shown to lenders on Wednesday includes handing back some loss-making contracts, revising the terms of others and potentially accepting financial support from the Government if it can not secure it from private sector sources.

A Transport Scotland spokesman insisted Carillion had "no intention of withdrawing" from the Aberdeen bypass project and that "they too remain committed to completing it in accordance with the contract".

Administration would put at risk the jobs "at least some" of the 19,500 people employed by the firm, Sky News said.

Unite said that despite the Government having said that it has contingency plans should Carillion collapse it believes it must go further and make clear that it is considering all options.

As Sky News revealed last weekend, without support from the Government, Carillion's syndicate of banks will not provide up to £300m of new funding required from the end of the month.

It said the firm remained in constructive dialogue about short term financing while "longer term discussions are continuing".

Last month, Carillion said it received all necessary consents to defer the test date for both its financial covenants from December 31 to April 30, 2018, and that it was continuing constructive talks with stakeholders on options for cutting net debt and recapitalizing.

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