Builder to plunge out of FTSE 250

CONSTRUCTION giant Carillion is on course for demotion from the FTSE 250 as it prepares to launch an emergency fundraising.

The builder and engineering firm had a turnover of £5.2 billion last year and employs 43,000 staff. But its market capitalisation has crashed from almost £1billion in early July to less than £250 million following high profile problems on big contracts, including an Aberdeen road project and two NHS hospitals in public-private partnerships.

Carillion’s share price has plunged in recent weeks, from 192p on July 7 to just 50½p on Friday, making its relegation from the FTSE 250 Index in next month’s review a near certainty.

Carillion said in July that it was making an £845million provision to its finances because of issues with several contracts. Keith Cochrane, interim chief executive, said: ‘Tenders have been accepted with a high degree of uncertainty on key assumptions. Our ultimate success has been contingent on the performance of others not under our control. We’ve agreed design changes without agreeing incremental cost and value.’

Analysts expect Carillion to unveil a £500million turnaround plan in September when it releases half-year results.

Sam Cullen, an analyst at broker Jefferies, said the firm may have to announce sell-offs and a plan to get payments in more quickly, because it will struggle to raise £500 million purely from investors.