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Carillion: Banks call for government help | |
(about 4 hours later) | |
The troubled government contractor Carillion has held talks with its creditor banks this weekend and further meetings are planned for Monday, the BBC understands. | |
The construction firm owes £900m to RBS, Barclays, HSBC, Lloyds and Santander. | |
The banks may be able to show Carillion more leniency if the government is able to do its part, according to sources. | |
The firm's future is also being discussed by government officials. | |
Carillion is involved in major public projects such as the HS2 high-speed rail line, as well as managing schools and prisons. | |
How exactly the banks want the government to intervene is unclear. | |
They could want the government to offer some guarantees in case Carillion cannot pay back its debts. | |
Or they may want the government to take some of Carillion's key projects back into the public sector. | |
The TUC has called on the government to "step in" to "guarantee jobs and services". | |
Deputy general secretary Paul Nowak said: "Tens of thousands of jobs are now at risk, along with vital public services and major infrastructure projects across the country." | |
New Tory party chairman Brandon Lewis told the BBC the government was keeping "a very close eye on this". | New Tory party chairman Brandon Lewis told the BBC the government was keeping "a very close eye on this". |
Mr Lewis told the BBC's Andrew Marr Show that the government was "making sure all plans and contingency plans are in place". | |
But he refused to be drawn on whether the government would bail Carillion 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. | "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. |
Labour peer Lord Adonis tweeted that the government has "got questions to answer about propping up Carillion with contracts long after its problems clear. Looks like another Grayling bailout!" | Labour peer Lord Adonis tweeted that the government has "got questions to answer about propping up Carillion with contracts long after its problems clear. Looks like another Grayling bailout!" |
Last summer Transport Secretary Chris Grayling awarded Carillion part of the contract to build HS2, a week after the company had issued a profits warning and its chief executive had departed. | Last summer Transport Secretary Chris Grayling awarded Carillion part of the contract to build HS2, a week after the company had issued a profits warning and its chief executive had departed. |
Liberal Democrat leader Sir Vince Cable has urged the government not to agree to a taxpayer-funded bailout for Carillion. | Liberal Democrat leader Sir Vince Cable has urged the government not to agree to a taxpayer-funded bailout for Carillion. |
Alastair Stewart, a construction and property analyst at Stockdale Securities, said none of the solutions involving the government were "particularly palatable". | Alastair Stewart, a construction and property analyst at Stockdale Securities, said none of the solutions involving the government were "particularly palatable". |
"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," he said. | |
Share price plummeted | Share price plummeted |
Carillion has debts of £1.5bn, including a £587m pension shortfall. | |
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. | Since then, its share price has plummeted and it is now worth just £61m. |
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. |
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. |
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. |