Big UK government contractor sees shares plunge on debt woes

Chelsea West
January 14, 2018

They added: "Based on our current trading assumptions (Dec' 18 EBITDA £188m with material downside risk) and our estimates of the mounting debt ( £1.1bn), likely additional supply chain funding/working capital unwind ( £300m) and pension liabilities (£600m), we now see no equity value".

The company employs more than 20,000 workers and there are many more workers reliant on the company's future in its supply chains.

The crisis-hit construction firm, one of the largest suppliers of services to the public sector, has called on the government to step in to reduce the financial burden of a string of failed projects around the country.

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

Bosses at Carillion have appealed for a state-backed rescue, telling ministers that its survival rests on a bail-out of the firm's most troubled contracts.

"As part of its engagement with stakeholders, Carillion is in constructive dialogue in relation to additional short term financing while the longer term discussions are continuing".

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

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Her views were echoed by Unite union assistant general secretary Gail Cartmail, who said: "The government must consider all options while the future of Carillion hangs in the balance, including bringing contracts back in-house".

He added that workers "should have protection and guarantees from the government, including an assurance that operations will be directly transferred over to Network Rail with all jobs, pensions and rights safeguarded if Carillion goes bust". The Financial Times reported that the meeting was convened by Cabinet Office Minister David Lidington and included Business Secretary Greg Clark, Transport Minister Jo Johnson and Justice Minister Rory Stewart, as well as ministers from the culture, health, education and communities departments and the Foreign Office.

A government spokeswoman said: "Carillion is a major supplier to the government with a number of long-term contracts".

A Government spokesperson repeated a statement given to Sky News last weekend which said it was "committed to maintaining a healthy supplier market and work closely with our key suppliers".

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

Carillion, which has had to contend with a slowdown in many of its major markets, has seen its share price plummet from 230p a year ago to less than 15p on Friday.

They added: "The PPF is aware of the discussions between the company, government and banks and, along with the trustees and TPR, will act as it always does to protect the interests of Carillion scheme members and levy-payers".

Other reports by TheSundaySentinel

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