Collapse of U.K. parent doesn’t halt operations

TORONTO A spokesman for the Canadian subsidiary of insolvent British construction giant and state contractor Carillion says it’s business as usual in Canada despite the parent company’s collapse on Monday.

Cody Johnstone says that Carillion Canada is not in liquidation and its 6,000 employees in Canada continue to be paid, along with its subcontractors and suppliers.

He says the Canadian leadership team is looking at how to ensure continuity of operations after the parent company’s decision to go into compulsory liquidation after weekend talks with creditors failed to get the short-term financing it needed to continue operating.

In a research note, Raymond James analyst Frederic Bastien says Carillion bought Ontario contractor Vanbots Construction about 10 years ago and won contracts to build the country’s first two private-public partnership hospitals.

He says the focus in Canada now is on P3 ownerships, facilities management and other recurring activities such as road maintenance, remote workforce camp operations and power line construction and maintenance.

Bastien says Carillion’s Canadian assets, which include equity positions in several hospitals — including the Centre for Addiction and Mental Health in Toronto — would be attractive for a number of large potential buyers in Canada.

The collapse of Carillion came only days after one of the British group’s main lenders, Royal Bank of Scotland (RBS), tightened terms on its funding, court documents show, according to a report by Reuters.

The RBS decision three days before the collapse served to weaken attempts to protect Carillion’s cash position, the construction and services company’s interim CEO Keith Cochrane said in a statement submitted to the High Court in London.

RBS took “unilateral action, which in the company’s view undermined the group’s efforts to conserve cash,” Cochrane told Reuters.