Carillion lines up standby administrator as crunch talks continue

Carillion lines up standby administrator as crunch talks continue”

A Carillion sign in Manchester, Britain July 13, 2017.

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 a year ago when it issued a profit warning, suspended its dividend, and said key contracts were not losing money as debt rose.

Carillion also said turnaround proposals on the table were likely to cost shareholders.

The firm is struggling under £1.5bn of debt, including a pension shortfall of £587m, raising fears about its future. "We are monitoring this situation closely and will continue to do so".

Aside from its construction business the company has many outsourced public sector contracts in health, education, the prison service and local authorities.

The announcement comes after Carillion's stock market valuation hit fresh lows today amid reports the ailing contractor had lined up administrators.

Any collapse would be felt across Britain and also in Canada and the Middle East where it has worked on landmark projects.

Last summer, Carillion took on two five-year MoD contracts worth £158m to provide facilities management services at more than 230 military sites across Scotland, the north of England and northern Ireland.

Carillion's Midland Metropolitan Hospital construction site in Smethwick, Britain January 11, 2018.

Carillion shares made modest gains subsequently, now worth just under 15p each.

In Scotland, Carillion was awarded last February the £23m contract to lengthen platforms at Edinburgh Waverley station for a new generation of longer electric trains on the Edinburgh to Glasgow route and the east coast line.

Employing 19,500 people in the United Kingdom and 43,000 in total around the world, Carillion will today meet the UK's Pension Regulator and the pension rescue body, the Pension Protection Fund, because included in Carillion's liabilities is a pension shortfall of £587m.

In a statement, Carillion said: "Suggestions that Carillion's business plan has been rejected by stakeholders are incorrect".

The company met with creditors including RBS and Santander UK on Wednesday to ask them to consider a debt extension or roll-over in financing talks and it was expected to talk with the Pension Regulator on Friday.

The firm's most recent annual report showed the schemes had a combined deficit of £800m on the IAS 19 accounting measure as of 31 December 2016.

The person familiar with the situation, who asked not to be named due to the sensitivity of the situation, said the government needed to get involved to help prop up the supplier.

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