UK builder seeks rescue talks with government on Monday
Carillion reportedly on the verge of collapse
Carillion is planning last-minute talks with the UK government to avoid going into administration as early as Monday, Sky News reported, citing people it did not identify.
The debt-ridden builder has come up with a plan that would allow it to borrow new funding from existing lenders if the government agrees to guarantee payments at certain stages of public-sector contracts, with emergency talks with officials scheduled for Sunday, Sky said. A Carillion spokesman declined to comment on the report, while a government spokesperson reiterated on Saturday that officials are “carefully monitoring the situation” and working to ensure that contingency plans are robust.
A group of Carillion’s lenders are pushing for taxpayer help to save the debt-ridden builder after saying a business plan submitted on Wednesday was “too optimistic,” the Financial Times reported earlier, citing people with knowledge of the negotiations. Carillion on Friday denied that the proposal had been rejected. The builder, whose shares have plummeted after it issued three profit warnings in six months last year, employs about 43,000 people globally and gets three-quarters of its revenue from the UK.
UK ministers decided against providing a direct financial bailout to Carillion and were likely to be “lukewarm” about the latest rescue effort, Sky reported citing unidentified government sources. Officials and the company’s lenders are said to have held emergency talks on Friday night, according to the broadcaster.
Carillion shares fell 37 per cent in the past two days, after rising at the start of the week on optimism about its business plan. The fate of the builder is sensitive for the government because Carillion is a supplier to several departments, with projects that involve building roads, libraries and hospitals, as well as the HS2 high-speed rail link.