Carillion: Wolverhampton-based company racing to avoid financial ruin
Struggling construction services company Carillion is reportedly racing to secure new funding to avoid collapse.
The Wolverhampton-based company – a major supplier to the Government and named among the firms awarded deals for the building of phase one of the controversial HS2 railway line – is set to meet with lenders in the coming days in a bid to sort out their money woes.
The firm is also building the new Midland Metropolitan Hospital in Smethwick – which has seen massive delays and is now a year behind schedule – and working on the huge Paradise redevelopment in Birmingham city centre as well as the HS2 deals secured.
Carillion’s rescue plan would involve handing back loss-making contracts, revising the terms of others and potentially accepting financial support from the Government if it cannot secure private funding, it was reported.
A company spokesman said of the latest developments: “As previously indicated, Carillion is in constructive discussions with a broad range of stakeholders regarding its options to reduce net debt and recapitalise and/or restructure the group’s balance sheet.
“The group is currently finalising its business plan, which it intends to present to its financial creditors and certain other stakeholders on Wednesday, in line with the previously announced timetable.
“Once finalised, the business plan will provide the basis for the agreement of a proposal to restore Carillion’s balance sheet,” the company spokesman added.
Government support could be a loan on commercial terms, an agreement to re-price some contracts already in place or to allow the company to hand back loss-making work, it was reported.
The firm, which employs around 400 people at its headquarters on Wolverhampton’s Ring Road St Mark’s, has struggled since reporting half-year losses of £1.15 billion.
Its share prices plummeted 90 per cent after announcing its first profit warning in July last year.
The news comes comes as the company are currently working on two major projects within the Midlands.
The share prices also slumped following the company’s decision to breach debt covenants along with another profit warning in November, reporting annual profits are forecast to be ‘materially lower than current market expectations’ when they are announced.