Carillion: ‘Matter of days’ to stop collapse

Carillion workersImage copyright
Carillion

The future of troubled engineering company Carillion will be being discussed at high-level government meetings This particular weekend, the BBC understands.

The firm will be a key government contractor for projects including the HS2 high-speed rail scheme, schools as well as prisons.

Sources say the firm carries a “matter of days” as in which teeters on the edge of collapse, with £1.5bn of debt including a pension shortfall of £587m.

Carillion will be trying to reach an agreement with creditors.

Liberal Democrat leader Sir Vince Cable said the government must not bail out the struggling construction company, the second largest inside UK.

Sir Vince, a former business secretary, told BBC Breakfast: “They’ve got to force the shareholders as well as indeed the creditors, the big banks, to take losses, as well as then the government can take responsibility for taking the contracts forward as well as generating sure they are delivered.”

  • Simon Jack: Carillion’s uncertain future
  • Where did in which go wrong for Carillion?

Rebecca Long-Bailey, shadow business minister, called on the government to take contracts back into public control.

In 2016 the Wolverhampton-based company, which employs 43,000 people globally, had sales of £5.2bn as well as until July boasted a market capitalisation of almost £1bn.

however since then its share cost has plummeted as well as in which will be at This particular point valued at about £61m.

Officials via the justice, transport as well as business departments will gather This particular weekend for a meeting chaired by the Cabinet Office.

The consultancy EY has been put on notice in case the company falls into administration.

On Friday, reports in which creditors had rejected a potential rescue plan sent Carillion’s shares down by more than 28%.


Analysis: A moral hazard

By BBC business correspondent Joe Lynam

A decade ago the government bailed out the banks because – being central to the workings of the entire economy – they were “too big to fail”.

at This particular point the same issue of moral hazard arises for the engineering giant Carillion.

If in which collapses, what happens to politically sensitive work in which in which does, such as building hospitals as well as running schools, jails or Ministry of Defence facilities?

Pausing in which work until completely new contracts are tendered, bid for as well as awarded could take years.

however bailing out a private company like Carillion, which paid out dividends to its shareholders last year, won’t play well with taxpayers.

So Carillion will either have to restructure its debts within days with its at This particular point impatient banks or file for administration as well as wish in which EY can find a solution which will be quick, clever as well as doesn’t cost jobs.


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Media captionBailing out Carillion ‘could send the wrong message’, Vince Cable says.

however in Friday’s statement, Carillion said: “Suggestions in which Carillion’s business plan has been rejected by stakeholders are incorrect.”

in which said the firm remained in constructive dialogue about short-term financing while “longer term discussions are continuing”.

The government has said in which will be “monitoring the situation closely”.

A government spokeswoman said: “Carillion will be a major supplier to the government with several long-term contracts. We are committed to maintaining a healthy supplier market as well as work closely with our key suppliers.”

The BBC understands in which the Ministry of Justice has drawn up plans to bring £200m of prison contracts run by Carillion back into public control.

  • HS2 Building part of the high-speed rail line between London, Birmingham, Leeds as well as Manchester

  • MoD homes Maintains 50,000 homes for the Ministry of Defence

  • Schools Manages nearly 900 buildings nationwide

  • Network Rail Second largest supplier of maintenance services

  • Prisons Holds £200m in prison contracts

PA

Carillion, which was founded inside late 1990s as a spin-off via building giant Tarmac, also operates in Canada, the Middle East as well as the Caribbean.

in which has worked on key projects including the Royal Opera House in London, the Suez Canal road tunnel as well as Toronto’s Union Station.

in which will be also the second largest supplier of maintenance services to Network Rail.

The general secretary of the RMT rail union, Mick Cash, said the government should give Carillion’s workers “clear-cut assurances”, as thousands of jobs were “hanging by a thread”.

in which also wants an assurance in which operations could be directly transferred over to Network Rail if Carillion goes bust.

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