Carillion: 'Matter of days' to stop collapse

Carillion: 'Matter of days' to stop collapse
From BBC - January 13, 2018

The future of troubled engineering company Carillion is being discussed at high-level government meetings this weekend, the BBC understands.

The firm is a key government contractor for projects including the HS2 high-speed rail scheme, schools and prisons.

Sources say the firm has a "matter of days" as it teeters on the edge of collapse, with 1.5bn of debt including a pension shortfall of 587m.

Carillion is trying to reach an agreement with creditors.

Liberal Democrat leader Sir Vince Cable said the government must not bail out the struggling construction company, the second largest in the UK.

Sir Vince, a former business secretary, told BBC Breakfast: "They have got to force the shareholders and indeed the creditors, the big banks, to take losses, and then the government can take responsibility for taking the contracts forward and making sure they are delivered."

Jon Trickett, shadow minister for the Cabinet Office, called on the government to take contracts back into public control, describing its relationship with the Carillion as a "failing ideological project".

"It has been clear for months that Carillion has been in difficulty but the government has continued to hand over contracts to the company," he said.

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 almost 1bn.

But since then its share price has plummeted and it is now valued at about 61m.

Officials from the justice, transport and business departments will gather this weekend for a meeting chaired by the Cabinet Office.

The consultancy EY has been put on notice in case the company falls into administration.

On Friday, reports that creditors had rejected a potential rescue plan sent Carillion's shares down by more than 28%.

Analysis: A moral hazard

By BBC business correspondent Joe Lynam

A decade ago the government bailed out the banks because - being central to the workings of the entire economy - they were "too big to fail".


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