Carillion puts administrators on standby as construction firm fights to survive


Carillion is holding crisis talks with United Kingdom government representatives on Friday, which Sky News said were aimed at safeguarding the more than 28,000 pension scheme members who face potential cuts to retirement payments should Carillion fail.

United Kingdom ministers decided against providing a direct financial bailout to Carillion and were likely to be "lukewarm" about the latest rescue effort, Sky reported citing unidentified government sources.

On Friday, the firm dismissed reports lenders had rejected a critical restructuring plan, saying it remained in "constructive discussions" with its creditors.

Carillion shares fell 37 per cent in the past two days, after rising at the start of the week on optimism about its business plan.

The government has said it was "monitoring the situation closely".

Carillion has a pension deficit of roughly £580m, although this figure would be expected to rise sharply if measured according to the cost of insuring its various retirement schemes on a full buyout basis.

Minister met to discuss the future of construction giant Carillion, amid fears the struggling firm is approaching collapse.

"Without that commitment of support from the government, administration is all but inevitable", the source said.

"The thousands of workers with Carillion and those in the supply chain servicing its contracts across the public sector will be desperately anxious about the future and they too need to be reassured by the Scottish Government as a matter of urgency".

To date, numerous banks have indicated that they are reluctant to provide additional funding given the potential for huge losses on their existing exposure.

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"The government remains supportive of Carillion's ongoing discussions with their stakeholders", Blain said.

Employing 19,500 people in the United Kingdom alone, Wolverhampton-based Carillion is the second-largest supplier to Network Rail and maintains approximately half of the UK's prisons as well as roughly 50,000 homes for the Ministry of Defence.

Tensions around the 200-year-old company have been ratcheting up for weeks and on Thursday ministers overseeing everything from justice to transport, health and education met to discuss how they should respond to the possible demise of a business that plays a central role in British public life.

A number of disposals aimed at raising cash, including that of its Canadian operations, are progressing more slowly than originally anticipated.

Such a plan would leave its pension scheme, or the Pension Protection Fund, as a big shareholder.

Although the company has refused to name the trio of bungled contracts, problems with building the £350m Midland Metropolitan Hospital in Smethwick, expensive delays constructing the £335m Royal Liverpool Hospital and a £550m stretch of the Aberdeen bypass, top the list.

Carillion previous year issued three profit warnings in six months, causing its shares to plummet more than 90 percent since July 7.

Carillion's fight for survival is being led by interim boss and industry veteran Keith Cochrane, a former CEO of engineer Weir Group.

Carillion reported a first-half pre-tax loss of £1.15bn in September, while it announced just before Christmas that its lenders had agreed to defer a test of its borrowing agreements from 31 December to 30 April.

"The company has kept us informed of the steps it is taking to restructure the business".