News

Carillion puts administrators on standby as construction firm fights to survive

Fears over the future of the major construction services group Carillion continue to intensity after the firm is believed to have lined up administrators, if a rescue package cannot be agreed.

The company’s stock market value plummeted this afternoon to a new low of 12.97p – valuing the company at just £55.8m, as reports emerged Carillion had readied EY, one of the big four accountancy firms. The move is part of contingency planning being the group attempts to secure approximately £300m of emergency funding in the next few weeks.

The firm which has been without a permanent chief executive since July when Richard Howson stepped down in the wake of the firm issuing a profit warning is struggling under £900m of debt and a £590m pension deficit with unions urging the government to step in to protect 19,500 jobs at risk.

A business plan tabled by the group on Wednesday was reported to have been rejected by stakeholders because it failed to present a solid proposition for restructuring the business. It comes as the government and stakeholders meet today in an attempt to agree on a rescue package for the firm that would help it avoid collapse.

Carillion have denied this in a statement issued late on 12 January 2018 which said: "Carillion continues to engage in constructive discussions with a range of financial and other stakeholders regarding options to reduce debt and strengthen the group's balance sheet. Suggestions that Carillion's business plan has been rejected by stakeholders are incorrect. It is too early to predict the outcome of these discussions but Carillion expects that any such agreement is likely to involve the raising of new capital and the conversion of existing financial indebtedness to equity which would result in significant dilution to existing shareholders".

A government spokeswoman said: "Carillion is a major supplier to the government, with a number of long-term contracts. We are committed to maintaining a healthy supplier market and work closely with our key suppliers. The company has kept us informed of the steps it is taking to restructure the business."

Shadow business secretary Rebecca Long-Bailey said: "The collapse of Carillion could provoke a serious crisis. "It would have major implications for the outsourced government contracts the company holds as well as the firm's thousands of workers, those in the supply chain and those who rely on Carillion's pension fund. The government, which, despite warnings, carried on with its programme of outsourcing public services to this company, must stand ready to bring these contracts back into public control, stabilise the situation and safeguard our public services."