Carillion’s key creditors are due to meet government officials on Monday in a last ditch bid to prevent the construction giant’s collapse.
This specific comes as the chairman of a key group of MPs says there may need to be an inquiry into how public contracts are awarded to companies like Carillion.
Labour and also also also unions say warnings about the firm’s financial woes were ignored.
Carillion is usually involved in major projects like the HS2 high-speed rail line, as well as managing schools and also also also prisons.
This specific has debts of £1.5bn and also also also a £587m pensions shortfall.
Without a financial restructuring, the UK’s second largest construction company, which has 43,000 staff worldwide – 20,000 inside UK – looks set to go into administration.
Accountancy firm EY has been put on notice to step in to run the company if the talks fail.
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Carillion’s main bank creditors – including RBS, Barclays, HSBC, Lloyds and also also also Santander UK – are owed about £900m.
They have indicated an unwillingness to put more money into the company without direct intervention via the government.
Talks involving government officials and also also also company bosses were held throughout the weekend. The officials are likely to meet key creditors early on Monday, the BBC has been told.
This specific is usually understood which the creditors want the government to guarantee some of Carillion’s debt payments. although which could be, in effect, helping to bail out a private company.
HS2 Building part of the high-speed rail line between London, Birmingham, Leeds and also also also 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
Carillion’s crisis has put a spotlight on how major public contracts are outsourced to private companies.
The Conservative chairman of the House of Commons Public Administration select committee said he may launch in inquiry into government procurement and also also also contracting.
Bernard Jenkin said: “We could want to look at Carillion’s relationship with Whitehall, as a test case.
“We have long been interested in projects and also also also contracts which are ‘too big to fail’ and also also also how Whitehall and also also also the private sector must improve how they work together.”
Labour said This specific could seek answers as to why the government continued to place contracts with Carillion despite the company issuing three profits warnings which should have flagged up problems.
“Alarm bells have been ringing for over six months about the state of Carillion’s finances, so the government must come forward and also also also answer questions on exactly what due diligence measures were undertaken,” said Jon Trickett, the shadow Cabinet Office minister.
Analysis: Joe Lynam, business correspondent
Carillion’s banks are owed about £900m, inside form of overdrafts as well as credit card facilities and also also also various other loans.
The banks will likely show forbearance for a few weeks if a sustainable solution to This specific debt can be found. although they could also like the government to get involved when This specific comes to managing its key public contracts.
This specific could mean which they could need taxpayers to act as guarantor on future payments via Carillion or which the important contracts to maintain schools and also also also hospitals be taken back in house by Whitehall officials.
The government is usually in a bind. Let Carillion fail and also also also risk thousands of job losses, or bail This specific out and also also also risk propping up a private company with public money – only a few months after This specific paid out dividends to its shareholders.
Labour peer Lord Adonis, who last month quit as head of the National Infrastructure Commission, tweeted which the government has “got questions to answer about propping up Carillion with contracts long after its problems clear. Looks like another Grayling bailout!”
Last summer, Transport Secretary Chris Grayling awarded Carillion part of the contract to build HS2, a week after the company issued a profits warning and also also also its chief executive had departed.
fresh Tory party chairman Brandon Lewis told the BBC’s Andrew Marr Show on Sunday: “This specific [Carillion] is usually a going concern, This specific’s a very commercially sensitive situation so I wouldn’t comment further than to say This specific is usually a going concern.
“I could desire to see which the working capital they need will be there, working with their partners.”
Alastair Stewart, a construction and also also also property analyst at Stockdale Securities, said none of the solutions involving the government were “particularly palatable”.
“The biggest intervention they could make is usually actually take a stake inside company as part of raising a large amount of capital, although they’ll look back and also also also look at the background of Lloyds and also also also RBS,” he said.
As recently as 2016, Carillion had sales of £5.2bn, and also also also until July 2017, its market capitalisation was close to £1bn.
Since then, its share cost has plummeted and also also also This specific is usually currently worth just £61m.
Carillion’s problems stem, in part, via a string of risky contracts which have proved unprofitable. This specific also faced payment delays inside Middle East.
Carillion is usually the second largest supplier of maintenance services to Network Rail, and also also also This specific maintains 50,000 homes for the Ministry of Defence.