Thursday, 18 January, 2018

Government in crisis talks over company that provides vital services to schools

Reuters Reuters
Heather Davidson | 14 January, 2018, 00:26

Troubled construction firm Carillion could fall into administration as soon as Monday if the government does not back a rescue plan, according to reports.

On Friday, the firm dismissed reports lenders had rejected a critical restructuring plan, saying it remained in "constructive discussions" with its creditors.

As Sky News revealed last weekend, without support from the Government, Carillion's syndicate of banks will not provide up to £300m of new funding required from the end of the month.

Carillion is a key supplier to the Government and has contracts in the rail industry, education and NHS.

"The Government knows the disastrous consequences of a Carillion collapse so is doing all it can to avoid that happening".

The meeting comes as Carillion - a major government contractor on projects including High Speed 2 - races to secure additional funding to avoid collapse, with around 19,500 United Kingdom jobs at risk.

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.

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.

It has met lenders to discuss options to reduce debts, recapitalise and/or restructure the group's balance sheet.

"We are committed to maintaining a healthy supplier market and work closely with our key suppliers".

The opposition Labour's Party's spokeswoman on business issues, Rebecca Long-Bailey, says the collapse of Carillion "would have major implications for the outsourced government contracts the company holds, as well as the firm's thousands of workers, those in the supply chain and those who rely on Carillion's pension fund".

The UK Government said a ministerial meeting to discuss the crisis took place on Thursday, with a spokeswoman adding: "We are carefully monitoring the situation while working to ensure our contingency plans are robust".

Carillion also declined to comment on the reports.

"The company has kept us informed of the steps it is taking to restructure the business".

A spokesman for the Pension Regulator said: "We have been and remain closely involved in discussions with Carillion and the trustees of the pension schemes as this situation has unfolded".

"We will not comment further unless it becomes appropriate to do so".

The Rail, Maritime and Transport (RMT), Unite and GMB unions all called for workers rights, including pensions, to be protected as a priority.

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