Bankruptcy of U.K.’s Carillion seen to have modest effect on projects

The looming bankruptcy of U.K.-based Carillion PLC could force some Canadian joint-venture partners to pick up the financial slack at various major construction projects, but analysts say the overall impact of the liquidation on Canada will be modest.

Carillion, one of the U.K.’s largest construction firms, filed for liquidation on Monday. The company employs around 50,000 people worldwide, including 6,000 in Canada.

The company’s financial woes bring into question the construction of several major construction projects in Canada, including roadbuilding in Alberta and Ontario and the construction of hospitals and mental health facilities in the Northwest Territories, Nunavut, Saskatchewan and Ontario. It also has several major long-term maintenance contracts for highways and medical facilities across Canada.

One joint-venture partner with Carillion, Calgary-based Graham Construction, is planning to boost its stake in the construction and maintenance of a psychiatric facility in North Battleford, Sask., that is set to near completion this summer.

“We’ll all just step up and fill the gap,” said Grant Beck, president and CEO of Graham. “There was a little bit of anxiety and disruption in the initial stages, but really nothing that would affect the project in the long term.”

Carillion was responsible for 50 per cent of the $407-million contract, including 20 per cent of the construction costs and 80 per cent of maintenance costs, which would be spread over 30 years. Graham covered the other 80 per cent and 20 per cent, respectively.

Another big project in question is the Stanton Territorial Hospital in the Northwest Territories, being built by a consortium including Carillion, HOCHTIEF PPP Solutions North America Inc. and Bird Capital Ltd. However, the other partners in that project are also expected to boost their equity stake in the project, analysts said. The total construction and 30-year maintenance project for the facility is $1.1 billion.

The government of the Northwest Territories said in a written statement that there would be “no impact on construction currently underway” and said it expects the facility to open on schedule in mid2019.