The government will meet Carillion and the Pensions Regulator on Friday to discuss the services and construction company’s deficit. Carillion, which is one of the government’s biggest contractors, is struggling under £1.5bn of debt, including a pension shortfall of £587m.The company held talks with its lenders and advisers in London on Wednesday.However, no announcement has been made on a business plan to secure its future.Carillion is the UK’s second-largest construction company and employs 43,000 people globally. It has been awarded contracts to build part of £56bn High Speed 2 railway, including the first phase of the line which will run between London and Birmingham and is scheduled to open in 2026.Carillion also manages nearly 900 schools, provides services to the NHS and works with National Grid.Carillion scrambles to stay afloatHS2 contractor’s shares hit by profit alertWhere did Carillion’s problems come from?The Financial Times reported that ministers from across a number of departments met on Thursday to discuss Carillion’s financial problems.It said that David Lidington, who was moved to the Cabinet Office as part of Prime Minister Theresa May’s reshuffle this week, convened a meeting with Business Secretary Greg Clark, new Justice Secretary Rory Stewart, new Transport Secretary Jo Johnson and Liz Truss, Chief Secretary to the Treasury.A spokeswoman for the government declined to comment on any specific meetings.”Carillion is a major supplier to the government with a number of long-term contracts. We are committed to maintaining a healthy supplier market and work closely with our key suppliers,” she said.”The company has kept us informed of the steps it is taking to restructure the business. We remain supportive of their ongoing discussions with their stakeholders and await future updates on their progress.”
Carillion was forced to ask its banks, which include Santander UK, HSBC and Barclays, for support after breaching its loan agreements last year when it issued a series of profit warnings.The business is now worth just £86m after its share price has plunged by more than 90% over one year.The company is putting together a business plan – which it presented to its banks at the meeting on Wednesday – which it said “will provide the basis for the agreement of a proposal to restore Carillion’s balance sheet”.A spokeswoman for the Pension Protection Fund said it was “aware of the discussions between the company, government and banks and, along with the trustees and the Pensions Regulator, will act as it always does to protect the interests of Carillion scheme members and levy payers”. A spokesman for the Pension Regulator said: “We have been and remain closely involved in discussions with Carillion and the trustees of the pension schemes as this situation has unfolded. We will not comment further unless it becomes appropriate to do so.”Carillion was unavailable for comment.
Source: BBC News