Carillion - railway contractor / public services provider - financial concerns, 2017/18, now in liquidation

[whole diary]

[martyjon]

Can any member of this forum give an up to date position of this business.

I have read comments about this company on other forums such as ;-

effectively bust;

are they still solvent;

worth £120 million or so with net debt of £800 million plus:

likely to breach their banking covenants at the 31 December;

I have checked the share price of this company and note it has plunged from about 200p per share in June to under 20p yesterday.

One Carillion document I read on-line contains the following statement ;-

 'Following discussions with its principal lenders and with their support, the board has concluded that it is necessary to amend the relevant agreements to defer the test date for both its financial covenants from 31 Dec 17 to 30 Apr 2018 (based on EBITDA for the 12 months to that date), by which time it expects to be implementing its recapitalisation plan.'

Hmmm - another Monarch ?

[Phantom]

http://www.cityam.com/276254/carillion-canadian-backer-dumps-big-slug-shares-

One of Carillion's largest shareholders sold a big stake in the ailing contractor yesterday evening.

Canadian fund manager Letko, Brosseau & Associates sold millions of Carillion shares, reducing its interest from 4.61 per cent to 3.46 per cent a stake of 15m shares.

A regulatory announcement on the matter was made at 12.30pm today.

Shares in the Wolverhampton-headquartered firm rose sharply this morning after hitting new lows yesterday. They are currently 1.3 per cent up from yesterday's closing price.

The firm's market capitalisation is lingering around £85m, less than a tenth of its valuation at the start of the year.

Read more: From horror show to too big to fail: City reacts to Carillion meltdown

Carillion investors were dealt a fresh blow on Friday after the firm revealed it was expecting to breach banking covenants, had received a deferral on their testing from lenders and issued its third profit warning of the year.

The announcement prompted the UK^▸ (United Kingdom) government to reaffirm its support for Carillion as it seeks to resize operations.

Carillion continues to secure important contracts despite concerns about its future. On Monday it announced it had been included on a shortlist of firms selected to build new schools in the UK.

Interim boss Keith Cochrane said the announcement demonstrated "we continue to retain the confidence of key customers despite the group’s current challenges".

Letko, Brosseau & Associates has been approached for comment.

[JayMac]

There's either a government bail out on the horizon to protect their HS2^▸ (The next High Speed line(s)) project, a brokered takeover bid, or, most likely insolvency.

Carillon themselves talk of recapitalisation "early next year". That's if they survive that long.
They will struggle to recapitalise if banking covenants are breached.

The ice Carillon are skating on is very thin...

[Electric train]

Balfour Beatty went through something similar a few years ago ................. question is can UK^▸ (United Kingdom) PLC afford to loose such a large civil engineering company as Carillion

[broadgage]

AFAIK^▸ (as far as I know), they are still just about solvent, if they were insolvent it would be a criminal offence to carry on trading.

From a more practical or common-sense point of view they are bust and in my view are unlikely to survive in the present form for long.

I doubt that any failure or insolvency would have much effect on the wider economy, the assets and contracts would be purchased or taken over by another firm.
Very sad for employees who may be thrown out of work, or engaged on less favourable terms by a competitor, and unfortunate for creditors.
But probably not of wider significance.

[ray951]

I don't know whether they are the main contractor but they are doing a lot of work for the Oxford area enhancements. So if they did go bust it could seriously impact that work. They would either have to retender the work or possibly an administrator could sell/transfer the contract to someone else.

Are they involved in any of the GWML^▸ (Great Western Main Line) electrification programme?

[broadgage]

I think that I have read, that Carillion have done or are doing some of the civil works for electrification, not the actual trackside works, but civil works for substations and the like.

[Electric train]

I think that I have read, that Carillion have done or are doing some of the civil works for electrification, not the actual trackside works, but civil works for substations and the like.

They have been doing some OLE^▸ (Overhead Line Equipment, more often "OHLE") works for Crossrail in Paddington OOC^▸ (Old Oak Common (depot)) area as it tied in with their main work of altering platform 12, 13 and 14, the layout for the access to OOC depot at Kensal and around the Westbourne Park area

[Pb_devon]

The saga continues....

http://www.bbc.co.uk/news/business-42595874


"Carillion, the troubled services and construction group, will reveal a new business plan this week in a bid to avoid collapse.

The company, one of the government's biggest contractors, has issued a series of profit warnings in recent months.

The turmoil has sent its shares tumbling by 90% since July.

The HS2^▸ (The next High Speed line(s)) contractor said it was in discussions about ways of reducing debt and obtaining new funding.

A business plan due to be presented to creditors and other stakeholders on Wednesday will form the basis of a "proposal to restore Carillion's balance sheet", a spokesperson said." .......

[ChrisB]

Taken on too many loss-making contracts such that their debt level exceeds their capitalisation....hence the debt restructuring needed. Aren't they leading on HS2^▸ (The next High Speed line(s))?

Also have a large hole in their pension scheme

[broadgage]

The end appears near
http://www.bbc.co.uk/news/business-42656879

[Worcester_Passenger]

The headline on today's Financial Times is

Bankers urge Downing St to save Carillion
Lenders rebuff contractor’s plan
Group plays key role in HS2^▸ (The next High Speed line(s)) project

[JayMac]

HMG are going to be between a rock and a hard place if Carillion can't continue to trade.

They either have to bail the company out directly, guarantee Carillion's debt to the banks, or nationalise large parts of the business. None of those options is particularly palatable for a Conservative administration.

There are prisons, schools and hospitals that have to be protected.

The likes of rail infrastructure/maintenance contracts and their staff should be able to transfer to Network Rail fairly seemlessly, or to co-contractors where they exist.

With their fingers in so many 'public' pies (nuclear decommissioning, power transmission networks, highways, MOD property, telecommunications...) it will be a job and a half ensuring seemless continuity if they fail.

And the other other headache for HMG is the pension black hole.

Too big to be allowed to fail?

[JayMac]

Today's FT article is well worth a read, to see just how far Carillion's tentacles stretch. The article can't be shared here due to subscriber T&Cs and copyright. You can however read it as one of three free articles a week by providing email details, if you are not already a subscriber.

Or buy the paper!

https://www.ft.com/content/e9f0f06c-f7b4-11e7-88f7-5465a6ce1a00

[Chris from Nailsea]

An update, from the BBC^» (British Broadcasting Corporation - home page):

Carillion: 'Matter of days' to stop collapse



The future of troubled engineering company Carillion is being discussed at high-level government meetings this weekend, the BBC understands.

The firm is a key government contractor for projects including the HS2^▸ (The next High Speed line(s)) high-speed rail scheme, schools and prisons.  Sources say the firm has a "matter of days" as it teeters on the edge of collapse, with £1.5bn of debt including a pension shortfall of £587m.  Carillion is trying to reach an agreement with creditors.

Liberal Democrat leader Sir Vince Cable said the government must not bail out the struggling construction company, the second largest in the UK^▸ (United Kingdom).  Sir Vince, a former business secretary, told BBC Breakfast: "They've got to force the shareholders and indeed the creditors, the big banks, to take losses, and then the government can take responsibility for taking the contracts forward and making sure they are delivered."

...

Officials from the justice, transport and business departments will gather this weekend for a meeting chaired by the Cabinet Office.  The consultancy EY has been put on notice in case the company falls into administration.

On Friday, reports that creditors had rejected a potential rescue plan sent Carillion's shares down by more than 28%.  But in Friday's statement, Carillion said: "Suggestions that Carillion's business plan has been rejected by stakeholders are incorrect."  It said the firm remained in constructive dialogue about short-term financing while "longer term discussions are continuing".

The government has said it is "monitoring the situation closely".  A government spokeswoman said: "Carillion is a major supplier to the government with a number of long-term contracts. We are committed to maintaining a healthy supplier market and work closely with our key suppliers."

...

The general secretary of the RMT^▸ (National Union of Rail, Maritime & Transport Workers) rail union, Mick Cash, said the government should give Carillion's workers "clear-cut assurances", as thousands of jobs were "hanging by a thread".

It also wants an assurance that operations would be directly transferred over to Network Rail if Carillion goes bust.