Carillion worked on the Battersea Power Station revamp
The troubled government contractor Carillion has held talks with its creditor banks this weekend and further meetings are planned for Monday, the BBC understands. The building firm owes £ 900m to RBS, Barclays, HSBC, Lloyds and Santander. The banks may be able to show Carillion more leniency if the government is able to do its share, according to sources. The firm’s future is also being discussed by government officials. Carillion is involved in major public projects such as HS2 high-speed rail line, as well as managing schools and prisons. Simon Jack: Carillion’s uncertain future
Where did it go wrong for Carillion?
How exactly do the banks want the government to intervene is unclear. Carillion can not pay back its debts. Or they may want the government to take some of Carillion’s key projects back into the public sector.
HS2 Building part of the high-speed rail line between London, Birmingham, Leeds and Manchester
MoD homes Maintains 50,000 homes for the Ministry of Defense
Schools Manages nearly 900 buildings nationwide
Network Rail Second largest supplier of maintenance services
prisons Holds £ 200m in prison contracts
The TUC has “guaranteed jobs and services” to “step in” to “guarantee jobs and services”. Deputy General Secretary Paul Nowak said: “Tens of thousands of jobs at risk, along with vital public services and major infrastructure projects across the country.” New Tory party chairman Brandon Lewis told the BBC the government was keeping “a very close eye on this”. Mr Lewis told the BBC ‘s Andrew Marr Show that the government was “making sure all plans and contingency plans are in place”. But Carillion out. “It’s a very commercially sensitive situation so I would not hope that they would work with their partners,” he said. Labor peer Lord Adonis tweeted that the government has “got questions to answer about caring about the future” Last summer Transport Secretary Chris Grayling awarded Carillion part of the contract to build HS2, a week after the company had issued a profit warning and its chief executive had departed. Liberal Democrat leader Sir Vince Cable has a taxpayer-funded leaseout for Carillion. Alastair Stewart, a construction and property analyst at Stockdale Securities, said none of the solutions involving the government were “particularly palatable”. “The biggest intervention they could make is actually taking a stake in the company’s share of raising a large amount of capital, but they’ll look back and look at Lloyds and RBS,” he said. Share price plummeted Carillion has debts of £ 1.5bn, including a £ 587m pension shortfall. The UK’s second-largest construction company employs 43,000 people worldwide, with about 20,000 of them in the UK. It specializes in construction, as well as facilities management and ongoing maintenance. As recently as 2016 it had sales of £ 5.2bn and until July 2017 its market capitalization was close to £ 1bn. Since then, its share price is now just £ 61m.
Its problems stem from the fact that it has proved unprofitable. It also faces payment delays in the Middle East that hit its accounts. It has been working on high-profile projects, including the Battersea Power Station redevelopment and the Anfield Stadium expansion. It is also the second largest provider of maintenance services to the Network and maintains 50,000 homes for the Ministry of Defense, nearly 900 schools and farms roads and prisons. The concern is that if it were to collapse these key public sector services could a lot of disruption.