Cri­sis deep­ens as lenders re­ject res­cue pro­posal

19,500 jobs at risk as con­struc­tion gi­ant strug­gles with £900m of debt

The Courier & Advertiser (Dundee Edition) - - NEWS - Ben woods

The cri­sis at Car­il­lion looks set to deepen af­ter it emerged that lenders to the con­struc­tion gi­ant ef­fec­tively re­jected a res­cue plan pro­posed by the debt-laden group.

The Press As­so­ci­a­tion un­der­stands that a busi­ness plan tabled by the group on Wed­nes­day was knocked back be­cause it failed to present a solid propo­si­tion for re­struc­tur­ing the busi­ness.

Sources also sug­gested that the pro­posal’s method­ol­ogy was found want­ing, but talks were on­go­ing.

Shares in Car­il­lion crashed more than 28% to 14.2p fol­low­ing the news, with sep­a­rate re­ports say­ing that the group had put ac­coun­tancy gi­ants EY and PwC on standby in the event of an ad­min­is­tra­tion.

It comes as the Gov­ern­ment, pen­sion au­thor­i­ties and stake­hold­ers met yes­ter­day in an at­tempt to thrash out a res­cue pack­age for the firm which would help it avoid col­lapse.

Car­il­lion, which is strug­gling un­der £900 mil­lion of debt and a £590m pen­sion deficit, de­nied the busi­ness plan had been re­jected by stake­hold­ers, but added that a re­struc­tur­ing could re­sult in a debt for eq­uity swap.

In a state­ment, the com­pany 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.

“As part of its en­gage­ment with stake­hold­ers, Car­il­lion is in con­struc­tive di­a­logue in re­la­tion to ad­di­tional short term fi­nanc­ing while the longer term dis­cus­sions are con­tin­u­ing.”

Unions have also urged the Gov­ern­ment to step in to pro­tect 19,500 jobs that are now at risk.

Shadow busi­ness sec­re­tary Re­becca Long-Bai­ley said: “The col­lapse of Car­il­lion could pro­voke a se­ri­ous cri­sis.

“It would have ma­jor im­pli­ca­tions for the out­sourced gov­ern­ment con­tracts the com­pany holds, as well as the firm’s thou­sands of work­ers, those in the sup­ply chain and those who rely on Car­il­lion’s pen­sion fund.”

A Gov­ern­ment spokes­woman said: “As Car­il­lion is a ma­jor sup­plier to Gov­ern­ment it should come as no sur­prise that we are care­fully mon­i­tor­ing the sit­u­a­tion while work­ing to en­sure our con­tin­gency plans are ro­bust.

“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.”

Pic­ture: Getty Im­ages.

Car­il­lion is a ma­jor sup­plier to the gov­ern­ment and a key con­trac­tor in na­tional projects.

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