Tuesday, 23 January, 2018

Carillion: Urgent talks on construction firm's future

The new stand is seen under construction at the Anfield Stadium ahead of the English Premier League football match between Liverpool and West Ham at the Anfield stadium in Liverpool north-west England Image Carillion completed an expansion of Anfield stadium in 2016
Melinda Barton | 14 January, 2018, 14:03

But lenders effectively rejected a rescue proposal tabled by on Friday because it failed to present a "solid proposition" for restructuring the business, the Press Association reported.

It also won a contract a year ago to extend platforms at Edinburgh's Waverley Station.

Unions have called on the Government to intervene to safeguard almost 20,000 jobs that are now at risk. Its market value of 64 million pounds compares with debt and liabilities of 1.5 billion pounds, according to analysts.

The Guardian's website reported shadow business secretary, Rebecca Long-Bailey, as saying: "The collapse of Carillion could provoke a serious crisis".

The firm is part of the consortium building the Aberdeen Western Peripheral Road (AWPR).

Scottish Labour said it was important to know "just how exposed the Scottish government and the public purse is if Carillion were to collapse".

The company needs £300m of emergency funding and lenders are under pressure from the Government to keep the company afloat. It is involved in projects such as the HS2 railway line and in maintaining sites for the Ministry of Defence.

A Network Rail spokesman said: "Carillion is a good supplier to Network Rail and has a number of contracts across the country".

But since then its share price has plummeted and it is now valued at about £61m.

The Tate Modern commissioned six artists whose work is intricately linked to the urban environment and unveiled the giant street art
Image The company also built the Tate Modern

Warning against a Government bailout, he said: "I think what has to happen in this case is the contracts have to be kept going, supporting the supply chain and the tens of thousands of workers, and that can be done by the Government taking a lot of this in-house or re-tendering".

Laith Khalaf, a senior analyst at Hargreaves Lansdown, said it was likely the Scottish and UK Governments had been working on contingency plans since financial difficulties at Carillion first became clear previous year.

"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". The long-awaited route is due to be finished this year following lengthy delays.

Tensions around the 200-year-old company have been ratcheting up for weeks and on Thursday ministers overseeing everything from justice to transport, health and education met to discuss how they should respond to the possible demise of a business that plays a central role in British public life.

A spokeswoman for Carillion said it met creditors on Wednesday but would not comment on reports of further talks.

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

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.

"Handing Carillion bosses a blank cheque bail out is completely unacceptable - company bosses should not be rewarded for failure with public money", it said in a statement.