Construction giant to beg Whitehall for huge bailout
ONE of Britain’s biggest construction firms is to beg Whitehall officials for a bailout as it fights for survival.
Carillion, a major Government contractor in charge of building projects such as HS2, schools, hospitals and National Grid infrastructure, has been left with debts of £1.5billion following an accounting scandal.
It also has a pension black hole of £587million that puts the retirements of 28,500 at risk.
The firm is desperately trying to raise cash, and trustees for its retirement fund will meet Whitehall officials and the pension watchdog today. Talks are set to revolve around how the company will keep funding the scheme and meet the promises made to workers.
Senior ministers, including Business Secretary Greg Clark, met yesterday amid growing fears the firm is close to collapse.
It is understood that Carillion is considering asking for a bail-out to ensure it can continue working on vital projects but the Government has already put in place an emergency plan should it go bust.
Unions also called on the Government to do all it can to protect workers at the firm.
Unite assistant secretary Gail Cartmail said: ‘If taxpayers’ money is used to fund corporate mismanagement then the Government should be looking to ensure that public sector contracts are brought back in-house at the earliest possible opportunity.
‘If the Government is forced to institute a rescue package they need also to ensure that the supply chain is fully protected as many of these workers lack even the protection of basic employment rights.’
The firm employs around 43,000 people worldwide and also manages and maintains Army and hospital buildings, roads and swathes of Britain’s internet infrastructure.
Last July it revealed ballooning debts amid delays in collecting cash from clients, problems on contracts and a downturn in new business.
It issued three profit warnings last year amid falls in projected revenues and also faces an investigation by the City regulator Financial Conduct Authority into the information it divulged to shareholders in the run-up to its July trading update.
Carillion’s stock market value has slumped from around £1billion last summer to £86million yesterday.
The firm has been selling parts of the business including its UK health care arm in a bid to pay down debt. This week it has also been in crisis talks with lenders in a bid to secure more cash.
It is thought the firm needs about £300million in shortterm funding by the end of this month.
But many of Carillion’s lenders have reportedly baulked at the prospect of providing extra funding, raising the prospect of Carillion turning to the Government for emergency financial support.
A spokesman for the Pensions Regulator said only that it was involved in discussions with Carillion and trustees of the pension schemes. Carillion would not comment.