Carillion worked on the Battersea Power Station revamp
Talks are continuing to try to save the troubled construction firm Carillion amid reports it could collapse by Monday. The future of the firm is being discussed at high-level government meetings, the BBC understands. New Tory party chairman Brandon Lewis told the BBC the government was keeping “a very close eye on this”. The key government contractor has debts of £ 1.5bn, including a £ 587m shortfall pension. It is involved in major 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?
The firm is trying to reach an agreement with creditors, but sources said the firm has a “matter of days” on the edge of collapse. The consultancy EY has been put into the hands of the company. On Friday, reports that creditors had rejected a potential rescue plans Carillion’s shares down by more than 28%.
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
Mr Lewis told the BBC the government is “making sure all plans and contingency plans are in place”. “He told the Andrew Marr Show,” he said, “hopefully they’ll be able to work with their partners to get the capital they need to continue providing important services. Government bailout? Mr Lewis refused to be drawn on whether the government would lease 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 the government has “got questions to answer about propping up Carillion with contracts long after its problems clear” Looks like another Grayling bailout! ” 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. Lord Adonis resigned as chair of the National Infrastructure Commission in December, blaming in part what he described as “the Transport Secretary’s indefensible decision to lease-out the Stagecoach / Virgin East Coast rail franchise”. 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”. “There are particularly palatable,” said. “The biggest intervention they could make is actually a stake in the company as they raise a large amount of capital, but they’ll look back and look at Lloyds and RBS.” Share price plummeted Carillion, 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.
In December, it’s more than a day to pay back. However, the company’s banks, which include Santander UK, HSBC and Barclays, are understood to be more reluctant. Its problems stem from the fact that it has proved unprofitable. It also faces payment delays in the Middle East that hit its accounts. Last year, it issued three months ago and wrote down more than £ 1bn from the value of contracts. It has been working on high-profile projects, including the Battersea Power Station redevelopment and the Anfield Stadium expansion. However, it is also the second largest provider of maintenance services to the Network and maintains 50,000 homes for the Ministry of Defense, including 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.