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Carillion crunch rescue talks to resume | Carillion crunch rescue talks to resume |
(about 1 hour later) | |
Talks will continue later to try to save the troubled construction firm Carillion amid reports it could collapse by Monday. | Talks will continue later to try to save the troubled construction firm Carillion amid reports it could collapse by Monday. |
The future of the government contractor is being discussed at high-level Whitehall meetings, the BBC understands. | |
New Tory party chairman Brandon Lewis told the BBC the government was keeping "a very close eye on this". | |
Carillion has debts of £1.5bn, including a £587m pension shortfall. | Carillion has debts of £1.5bn, including a £587m pension shortfall. |
It is involved in major projects such as the HS2 high-speed rail line, as well as managing schools and prisons. | |
The firm is trying to reach an agreement with creditors, but sources have said the firm has a "matter of days" as it teeters on the edge of collapse. | |
The consultancy EY has been put on notice in case the company falls into administration. | 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%. | On Friday, reports that creditors had rejected a potential rescue plan sent Carillion's shares down by more than 28%. |
Mr Lewis told the BBC the government is "making sure all plans and contingency plans are in place". | |
"But it is a going concern... and hopefully they'll be able to work with their partners to get the working capital they need to continue providing important services," he told the Andrew Marr Show. | |
Government bailout? | |
Mr Lewis refused to be drawn on whether the government would bail the company out. | |
"It's a very commercially sensitive situation so I wouldn't comment further than to say I would hope to see that the working capital that they need will be there working with their partners," he said. | |
Liberal Democrat leader Sir Vince Cable has urged the government not to agree to a taxpayer-funded bailout. | |
Alastair Stewart, a construction and property analyst at Stockdale Securities, said none of the solutions involving the government were "particularly palatable". | |
"There's a number of ways in which the government can get involved but politically none of them are particularly palatable," said. | |
"The biggest intervention they could make is actually take a stake in the company as part of raising a large amount of capital, but they'll look back and look at the background of Lloyds and RBS." | |
Share price plummeted | |
Carillion, the UK's second-largest construction company, employs 43,000 people worldwide, with about 20,000 of them in the UK. | |
It specialises in construction, as well as facilities management and ongoing maintenance. | It specialises in construction, as well as facilities management and ongoing maintenance. |
As recently as 2016 it had sales of £5.2bn and until July 2017 its market capitalisation was close to £1bn. | As recently as 2016 it had sales of £5.2bn and until July 2017 its market capitalisation was close to £1bn. |
Since then, its share price has plummeted and it is now worth just £61m. | |
In December, it convinced lenders to give it more time to repay them. | |
However, the company's banks, which include Santander UK, HSBC and Barclays, are understood to be reluctant to lend it any more cash. | |
Its problems stem in part from a string of risky contracts which have proved unprofitable. | Its problems stem in part from a string of risky contracts which have proved unprofitable. |
It also faced payment delays in the Middle East that hit its accounts. | It also faced payment delays in the Middle East that hit its accounts. |
Last year, it issued three profit warnings in five months and wrote down more than £1bn from the value of contracts. | Last year, it issued three profit warnings in five months and wrote down more than £1bn from the value of contracts. |
It has worked on high-profile projects, including the Battersea Power station redevelopment and the Anfield Stadium expansion. | It has worked on high-profile projects, including the Battersea Power station redevelopment and the Anfield Stadium expansion. |
However, it is also the second largest supplier of maintenance services to Network Rail and maintains 50,000 homes for the Ministry of Defence, manages nearly 900 schools and manages roads and prisons. | However, it is also the second largest supplier of maintenance services to Network Rail and maintains 50,000 homes for the Ministry of Defence, manages nearly 900 schools and manages roads and prisons. |
The concern is that if it were to collapse these key public sector services could suffer a lot of disruption. | The concern is that if it were to collapse these key public sector services could suffer a lot of disruption. |