Road work backup plans in place: NDP
Struggling Carillion responsible for care of 43 per cent of Alberta’s highways
Alberta Transportation is assembling contingency plans for maintaining nearly half of the province’s highways as bankruptcy looms for the parent company of a major contractor.
United Kingdom-based Carillion PLC went into compulsory liquidation Monday amid a crushing debt load and failure to obtain short-term financing from creditors.
Its Canadian subsidiary, Carillion Canada, employs 6,000 people and generates about $1 billion annually through various contracts around the country, including three contracts to tend to 43 per cent of Alberta’s highways.
For now, contracts to care for 33,000 km of provincial road are unaffected, Transportation Minister Brian Mason said Tuesday.
“We have no reason to believe, at the moment, that they are about to be unable to perform their responsibilities, but in case that happens, we’re going to be ready,” Mason told reporters.
The ministry is now looking for backup plans, should Carillion’s Canadian operations halt, he said.
Carillion Canada is “undergoing analysis to determine its ongoing viability,” John Archer, Mason’s press secretary, said in a Tuesday email.
If the company enters receivership, it will continue maintaining highways until the government finds a replacement, he said.
Alberta Transportation is preparing tender documents in case it needs to find new bidders, and the Alberta Roadbuilders and Heavy Construction Association said members will help in a pinch.
The government doesn’t have its own equipment or personnel to plow or maintain highways after the former Progressive Conservative government outsourced the work in 1996, Mason said. The NDP government has no interest in reversing that decision, he said.
According to government records, Carillion’s contracts for highway maintenance cover much of the east side of Alberta, stretching from Fort McMurray in the north to Oyen in the south. The area includes all highways surrounding Edmonton, and Highway 16 from Wabamun Lake to the Saskatchewan border.
Carillion’s 10-year service contracts in those three areas expire in 2019, 2022 and 2023, and are collectively worth $96.8 million, Archer wrote.
The contracts include a $250,000 penalty in each of the 12 contract maintenance areas Carillion covers if the company fails to fulfil its obligations.
In addition to snow clearing, highway maintenance contractors also repair cracks and chips, sweep the roads, tend to road signs and wash bridges, among other work.
The opposition party Tuesday called on Mason to provide a more specific contingency plan.
“The collapse of one of Alberta’s major highway maintenance contractors is deeply concerning, especially in the middle of winter,” UCP transportation critic Wayne Drysdale said in a news release.
A spokesman for Carillion Canada told The Canadian Press that all of its employees continue to be paid and that business is proceeding as usual.
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.