UK construction firm Carillion can be in huge financial trouble.
The UK’s second-largest construction can be shouldering a whopping £1.5bn debt pile along with also some fear the item could collapse into administration.
The big concern can be over the disruption of which might cause, given Carillion holds so many government contracts – coming from building hospitals to managing schools.
the item also employs about 20,000 people inside the UK along with also has more staff abroad.
So how did the company get into such dire straits?
What does Carillion do?
Carillion specialises in construction, as well as facilities management along with also ongoing maintenance.
the item has worked on big private sector projects such as the Battersea Power station redevelopment along with also the Anfield Stadium expansion.
although the item can be perhaps best known for being one the largest suppliers of services to the public sector.
Notably, the item holds a contract to build part of the forthcoming HS2 high speed railway line along with also can be the second largest supplier of maintenance services to Network Rail.
the item also maintains 50,000 homes for the Ministry of Defence, manages nearly 900 schools along with also manages highways along with also prisons.
How big can be the item?
Very. Carillion employs 43,000 staff globally, around half of them inside the UK where the item does most of its business. the item also operates in Canada, the Middle East along with also the Caribbean.
In 2016 the item had sales of £5.2bn along with also until July boasted a market capitalisation of almost £1bn. although since then its share cost has plummeted along with also the item’s at of which point worth just £65m.
What has gone wrong for the firm?
Some argue the item has over-reached itself, taking on too many risky contracts of which have been unprofitable. the item also faced payment delays inside the Middle East of which hit its accounts.
Last year the item issued three profit warnings in 5 months along with also wrote down more than £1bn coming from the value of contracts.
of which has made the item much harder to manage its mountainous £900m debt pile along with also £600m pension deficit.
In December the firm convinced lenders to give the item more time to repay them.
However, the company’s banks, which include Santander UK, HSBC along with also Barclays, are understood to be reluctant to lend the item any more cash.
Why does the item matter if the item collapses?
As Carillion can be such a big supplier to the public sector, some fear its collapse might cause a lot of disruption.
Labour MP Jon Trickett told parliament of which if the item went under, the item might risk “massive damage” to a range of public services.
Thousands of jobs also hang inside the balance. Unions have said workers do not deserve to be caught inside the crossfire along with also have urged the government to safeguard their jobs along with also bring Carillion’s contracts back in house.
The government has said of which “contingency plans are in place” along with also the item can be closely monitoring the situation.
The big question can be who might pick up the firm’s loss-creating public contracts if the item went under – another outsourced services provider or the government itself?
Or might the government – which says Carillion continues to do not bad work on projects like Crossrail – be prepared to provide emergency financial support until the item gets its house in order?
Analysts say Carillion carries a large order book of business lined up, although will be unable to deliver the item unless its cash flow problems are resolved.