Debt-ridden Carillion in talks to stave off collapse

CRISIS-HIT Carillion will this week meet with its lenders to hammer out a rescue plan.

The contractor, which employs 19,500 in the UK, has been struggling with debt and problem contracts and needs new cash from next month to stave off collapse.

Last night it said it would be meeting ‘financial creditors and certain other stakeholders’ on Wednesday.

The company has been discussing potential Government support, which could mean a loan or handing back loss-making contracts.

Carillion is a key contractor for the Government, with jobs on HS2, Crossrail, hospitals and roads.

Last July it announced it had problems with several contracts, including an Aberdeen road project and two major hospital jobs, taking an £845million hit.

At one stage the company was expected to ask shareholders for cash, but its market valuation has plummeted so that now appears impractical. It has £925million of debt and a £600million pension deficit, dwarfing its stock market value of just £80million.

In addition to restructuring contracts, a rescue plan could also involve swapping debt for new shares in the company. Lenders include Santander, HSBC and Barclays.

Carillion has been unable to raise cash by selling operations, with one sale to Serco since its problems began.