Carillion disaster deepens after experiences building agency's lenders rejected rescue plan

Carillion disaster deepens after experiences building agency's lenders rejected rescue plan

The company needs £300m of emergency funding and lenders are under pressure from the Government to keep the company afloat.

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

The firm is struggling under a £1.5 billion mountain of debt and plunging share prices, with lenders reportedly rejecting a proposed rescue plan.

It is the UK's second-largest construction company, employing 43,000 people globally. "We are monitoring the situation closely and are in regular contact with the management team there".

Carillion PLC (LON:CLLN) shares dropped by almost 30% in late afternoon trading on reports that its lenders have rejected the embattled construction firm's business plan, and that it has lined up an accountancy firm as a standby administrator.

It said the firm remained in constructive dialogue about short-term financing while "longer term discussions are continuing".

Government officials and regulators will hold crisis talks on Friday aimed at safeguarding pensioners' interests at Carillion, the vast construction group which is racing to avoid collapse. Carillion is not expected to send a company representative.

Last month, Carillion said it received all necessary consents to defer the test date for both its financial covenants from December 31 to April 30, 2018, and that it was continuing constructive talks with stakeholders on options for cutting net debt and recapitalizing.

The talks took place 24 hours after a meeting of ministers from across a multitude of Whitehall departments to discuss contingency plans for its collapse.

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She said: "Carillion is a firm which has been awarded multi-million pound public contracts and if it was to fail, could cause a huge crisis".

"Without that commitment of support from the government, administration is all but inevitable", the source said.

Carillion's large syndicate of lenders includes Barclays, HSBC and Santander UK, as well as a host of overseas firms.

A number of disposals aimed at raising cash, including that of its Canadian operations, are progressing more slowly than originally anticipated.

A spokesman added: "Carillion is one of three partners delivering the route".

Such a plan would leave its pension scheme, or the Pension Protection Fund, as a big shareholder.

Last week, the company was dealt a fresh blow when the City watchdog launched a probe into the "timeliness and content" of statements it made to the‎ stock market about is financial position between December 2016 and July previous year, when a massive profit warning sent its shares crashing by 75%.

Carillion's fight for survival is being led by interim boss and industry veteran Keith Cochrane, a former CEO of engineer Weir Group.

Laith Khalaf, a senior analyst at Hargreaves Lansdown, said it was likely the Scottish and UK Governments had been working on contingency plans since financial difficulties at Carillion first became clear past year.

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