Regulators to hold pensions summit as Carillion crisis deepens

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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.

A spokeswoman said: "It is too early to predict the outcome of these discussions but Carillion expects that any such agreement is likely to involve the raising of new capital and the conversion of existing financial indebtedness to equity which would result in significant dilution to existing shareholders".

It is understood the Scottish Government has put contingency plans in place to plug the gap if Carillion collapses, covering both its facilities management and construction services.

Carillion - the UK's second-largest construction company - is engaged in crunch talks with the UK Government and the Pensions Regulator in an attempt to avoid going into administration.

The company was once valued above £2 billion but is now fighting net debts of more than £900 million, following a crisis sparked in July past year when it issued a profit warning, suspended its dividend, and said key contracts were not losing money as debt rose.

It said the firm remained in constructive dialogue about short term financing while "longer term discussions are continuing".

Unions warn that 19,500 British jobs are at risk if Carillion can't reach a deal with creditors.

The Guardian's website reported shadow business secretary, Rebecca Long-Bailey, as saying: "The collapse of Carillion could provoke a serious crisis".

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Ministers met Thursday to discuss the issue, and there will be "ongoing meetings", Blain said.

"The Government, who despite warnings carried on with its programme of outsourcing public services to this company, must stand ready to bring these contracts back into public control, stabilise the situation and safeguard our public services".

Carillion, which was founded in the late 1990s as a spin-off from building giant Tarmac, also operates in Canada, the Middle East and the Caribbean.

"We are committed to maintaining a healthy supplier market and work closely with our key suppliers".

"The company has kept us informed of the steps it is taking to restructure the business".

They added: "The PPF is aware of the discussions between the company, government and banks and, along with the trustees and TPR, will act as it always does to protect the interests of Carillion scheme members and levy-payers".

Unite also believes that if the Government provides any financial assistance or guarantees loans to Carillion, there must be an assurance that workers in the supply chain are protected.

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