The British government is keeping a “very close eye” on construction and outsourcing group Carillion, a senior minister said yesterday, amid reports it could go into administration within days.
“Hopefully they will be able to work with their partners to get the working capital they need to continue providing important services,” Brandon Lewis, the chairman of Prime Minister Theresa May’s Conservative party, told the BBC.
“This is a business that is a going concern. Of course ministers and my colleague the secretary state of business is keeping a very close eye on it.”
Carillion is a major government contractor involved in everything from schools to the multi-billion-pound High Speed Two (HS2) rail project, and employs 19,500 people in Britain.
But it has been struggling for some time and in July last year issued the first of several profit warnings.
On Friday, it confirmed it was seeking ways to reduce its debt.
The BBC and Financial Times newspaper reported that the firm was holding crunch talks with government figures yesterday. The FT said Carillion’s bankers have indicated they will only provide new funding if the government directly intervenes.
But ministers are expected to refuse, “making it increasingly likely that it could fall into administration as early as Monday”, the business daily said.
The BBC cited unnamed sources saying the firm has a “matter of days” to reach an agreement with creditors. Neither Carillion nor the government would confirm the talks.
Carillion has a wide range of public sector contracts, including providing support services for almost 900 schools and around 50,000 homes for military personnel. The company, which also operates in Canada and the Middle East with a global workforce of 43,000, had revenues of £5.2bn ($7.1bn, €5.9bn) last year.
In January, Britain’s Financial Conduct Authority (FCA), a watchdog, launched an investigation into its market updates.
“Carillion is a major supplier to government so we are continuing to carefully monitor the situation while working to ensure our contingency plans are robust,” a government spokeswoman said yesterday.
“The company has kept us informed of the steps it is taking to restructure the business.” In an update to the London Stock Exchange on Friday, Carillion said it had met with representatives of its creditor groups to present a business plan.
It denied media reports the plan had been rejected, saying it was “too early to predict the outcome of these discussions”.
“Carillion continues to engage in constructive discussions with a range of financial and other stakeholders regarding options to reduce debt and strengthen the group’s balance sheet,” it said.
Any deal is “likely to involve the raising of new capital and the conversion of existing financial indebtedness to equity”.
LEAVE A COMMENT Your email address will not be published. Required fields are marked*
Qatar achieves self-sufficiency in essential products; supply chain well diversified: KPMG
Bored day traders locked at home are now obsessed with options
Bank of Japan’s massive ETF purchasing seen benefiting top brokers
ECB says euro area still on shaky ground as economy reopens
India’s JSW Steel to focus on exports and cut costs
Qatar SMEs seen continuing on ‘path of success’ after Covid-19
Qatar Petroleum achieves many milestones in H1 of 2020
Australian PM calls for economic overhaul to fuel post Covid-19 recovery