Carillion talks over rescue package as shares slump
Firm struggling with large debt pile and pension deficit Unions urge UK government to step in and protect jobs
The crisis at Carillion deepened yesterday amid a fresh slide in its share price and as rescue talks continued.
Shares closed down 29 per cent amid reports 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 had suggested that the proposal’s methodology was found wanting, but talks were ongoing.
However, the firm put out a statement after the market had closed stressing that it continued to engage in “constructive discussions with a range of financial and other stakeholders regarding options to reduce debt and strengthen the group’s balance sheet”.
It added: “Suggestions that Carillion’s business plan has been rejected by stakeholders are incorrect. 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 shortterm financing while the longer term discussions are continuing.
“The board remains focused on seeking to deliver an outcome that will ensure that the group emerges considerably strengthened and able to continue delivering excellent service to its many public and private sector customers.”
Carillion, which is struggling under £900 million of debt and a £590m pension deficit, is looking for a way to secure its long-term future. Unions have urged the government to step in to protect 19,500 jobs that could be at risk.
Gailcartmail,uniteassistant general secretary, said: “The Carillion crisis has become a major story but it must not be allowed to go over the heads of its loyal workforce, who are effectively being held hostage by the whims of the market.
“Carillion can’t keep its workforce in the dark any longer, it needs to clearly tell them and their union representatives how they are trying to overcome the current problems, with an honest assessment of what the future holds.”
Talks between the company and lenders HSBC, Barclays, Santander and Royal Bank of Scotland have centred on options to reduce debts, recapitalise or restructure the group’s balance sheet.