Carillion lenders 'reject rescue plan' as crisis at construction group deepens

Carillion lenders 'reject rescue plan' as crisis at construction group deepens

Transport Scotland said that Carillion had "no intention of withdrawing" from the AWPR project, and that the consortium delivering the route "remains committed to completing it in accordance with the contract".

In a statement, Carillion said: "Suggestions that Carillion's business plan has been rejected by stakeholders are incorrect".

Carillion said that it was continuing to "engage in constructive discussions with a range of financial and other stakeholders".

Carillion PLC (LON:CLLN) shares dropped by almost 30% in late afternoon trading on reports that its lenders have rejected the embattled construction firm's business plan, and that it has lined up an accountancy firm as a standby administrator.

It also supports schools with health and safety and grounds maintenance. Carillion employs very few construction workers on its new build developments, instead relying on sub-contractors and agency labour.

The government has said contingency plans are in place.

In a note to clients, Peel Hunt's analysts said: "We suspect that given its mounting liabilities, recent press comment, growing customer worries and supply chain hesitancy that Carillion will be forced (by the banks) to accelerate its financial restructuring".

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 company met with creditors including RBS and Santander UK on Wednesday to ask them to consider a debt extension or roll-over in financing talks and it was expected to talk with the Pension Regulator on Friday.

Carillion also manages almost 900 schools, provides services to the NHS and works with National Grid.


Carillion revealed half-year losses of £1.15bn in September and is struggling under £900m of debt and a £590m pension deficit.

The Pensions Regulator would not comment on whether it was attending specific meetings, but a spokesman said: "We have been and remain closely involved in discussions with Carillion and the trustees of the pension schemes as this situation has unfolded".

The firm is now under investigation by the Financial Conduct Authority over the "timeliness and content of announcements" made between December 2016 and July 2017.

The government confirmed ministers met yesterday to discuss Carillion's future and were "monitoring the situation closely".

The group - which was demerged for Tarmac in the late 1990s - is a major supplier to the government with contracts across education, the NHS and the rail industry, including HS2.

Carillion was forced to ask its banks, which include Santander UK, HSBC and Barclays, for support after breaching its loan agreements previous year when it issued a series of profit warnings.

Carillion's share price has fallen by more than 70% since the middle of 2017.

A spokesman for the Scottish government said: "We continue to liaise with United Kingdom government colleagues to monitor and mitigate service risks associated with Carillion's financial situation".

"We will not comment further unless it becomes appropriate to do so".

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