Big UK government contractor sees shares plunge on debt woes
Jan 14 2018
The crisis-hit construction firm, one of the largest suppliers of services to the public sector, has called on the government to step in to reduce the financial burden of a string of failed projects around the country.
Government officials and regulators will hold crisis talks on Friday aimed at safeguarding pensioners' interests at Carillion, the vast construction group which is racing to avoid collapse.
Her views were echoed by Unite union assistant general secretary Gail Cartmail, who said: "The government must consider all options while the future of Carillion hangs in the balance, including bringing contracts back in-house". We urgently need to know just how exposed the Scottish Government and the public purse is if Carillion were to collapse.
The company was once valued above £2 billion but is now fighting net debts of more than £900 million, following a crisis sparked in July previous year when it issued a profit warning, suspended its dividend, and said key contracts were not losing money as debt rose.
Sir Vince, a former business secretary, told BBC Breakfast: "They've got to force the shareholders and indeed the creditors, the big banks, to take losses, and then the government can take responsibility for taking the contracts forward and making sure they are delivered". It maintains 50,000 homes for the Ministry of Defence, manages almost 900 schools and is heavily involved in the highways and prisons.
It is also the second largest supplier of maintenance services to Network Rail.
The firm's share price has plunged by more than 90% over the past year.
"Without that commitment of support from the government, administration is all but inevitable", the source said.
"You can see that one the one hand, it's in everybody's best interest that Carillion continues, but at the same time it's hard to chart a way forward".
Sky News has learnt that senior civil servants from the Cabinet Office are expected to attend an emergency summit that will also include representatives from The Pensions Regulator (TPR), Pension Protection Fund (PPF), Carillion's pension trustees and an assortment of City advisers.
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".
As well as employing 19,500 people in the United Kingdom, it is one of the government's biggest contractors.
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.
It said the firm remained in constructive dialogue about short term financing while "longer term discussions are continuing".
The future of troubled engineering company Carillion is being discussed at high-level government meetings this weekend, the BBC understands.