Carillion holds emergency talks with government amid fears of collapse

Alfred Osborne
January 13, 2018

Carillion also declined to comment on the reports.

The company is seeking financial support from commercial lenders or the government to avoid being put into administration.

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.

Its share price plunge more than 70% in the past six months after a shock profit warning wiped nearly £600m from the company's stock market value in July a year ago.

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

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".

Spun out of Tarmac almost 20 years ago and having bought Alfred McAlpine in 2008, Carillion has worked on key construction projects including London's Royal Opera House, the Suez Canal road tunnel and Toronto's Union Station.

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

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Carillion is facing a £300m shortfall in funding and met banks on Wednesday to present a business plan, outlining its turnaround pathway.

Carillion shares have fallen more than 25 per cent as the construction and business services company that is one of the British government's biggest contractors struggles under GBP1.5 billion ($A2.9 billion) of debt. It also has contracts in many other industrial sectors.

Carillion met ministers from a wide range of government departments on Thursday to discuss contingency plans for the company's collapse.

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. Carillion employs very few construction workers on its new build developments, instead relying on sub-contractors and agency labour.

By 4.00pm, Carillion shares were down 29.4%, or 5.88p to 14.11p, having hit a low of 12.5p after the reports emerged, after being more modestly lower this morning.

Unite assistant general secretary Gail Cartmail, said: "The Government must consider all options while the future of Carillion hangs in the balance, including bringing contracts back in-house".

"If the government is forced to institute a rescue package they need to also ensure that the supply chain is fully protected".

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