Where did it go wrong for Carillion?

The construction firm faces dangerously high levels of debt and its future hangs in the balance.

Carillion specialises in construction, as well as facilities management and maintenance
Carillion specialises in construction, as well as facilities management and maintenance

UK construction firm Carillion is in huge financial trouble.

The UK's second-largest construction company is shouldering a whopping £1.5bn debt pile and some fear it could collapse into administration.

The big concern is over the disruption this might cause, given Carillion holds so many government contracts - from building hospitals to managing schools.

It also employs about 20,000 people in the UK and has more staff abroad.

So how did the company get into such dire straits?

What does Carillion do?

Carillion specialises in construction, as well as facilities management and ongoing maintenance.

It has worked on big private sector projects such as the Battersea Power station redevelopment and the Anfield Stadium expansion.

But it is perhaps best known for being one the largest suppliers of services to the public sector.

Carillion worked on the Battersea Power Station revamp

Notably, it holds a contract to build part of the forthcoming HS2 high speed railway line and is the second largest supplier of maintenance services to Network Rail.

It also maintains 50,000 homes for the Ministry of Defence, manages nearly 900 schools and manages highways and prisons.

How big is it?

Very. Carillion employs 43,000 staff globally, around half of them in the UK where it does most of its business. It also operates in Canada, the Middle East and the Caribbean.

In 2016 it had sales of £5.2bn and until July boasted a market capitalisation of almost £1bn. But since then its share price has plummeted and it's now worth just £61m.

What has gone wrong for the firm?

Some argue it has over-reached itself, taking on too many risky contracts that have been unprofitable. It also faced payment delays in the Middle East that hit its accounts.

Last year it issued three profit warnings in five months and wrote down more than £1bn from the value of contracts.

Carillion is the second largest supplier to Network Rail

This has made it much harder to manage its mountainous £900m debt pile and £600m pension deficit.

In December the firm convinced lenders to give it more time to repay them.

However, the company's banks, which include Santander UK, HSBC and Barclays, are understood to be reluctant to lend it any more cash.

Why does it matter if it collapses?

As Carillion is such a big supplier to the public sector, some fear its collapse would cause a lot of disruption.

Labour MP Jon Trickett told parliament that if it went under, it would risk "massive damage" to a range of public services.

Thousands of jobs also hang in the balance. Unions have said workers do not deserve to be caught in the crossfire and have urged the government to safeguard their jobs and bring Carillion's contracts back in house.

The government has said that "contingency plans are in place" and it is closely monitoring the situation.

The big question is who would pick up the firm's loss-making public contracts if it went under - another outsourced services provider or the government itself?

Or would the government - which says Carillion continues to do good work on projects like Crossrail - be prepared to provide emergency financial support until it gets its house in order?

Analysts say Carillion has a large order book of business lined up, but will be unable to deliver it unless its cash flow problems are resolved.




Date: 12 January 2018 | Source: BBC

More UK News

Gardeners' World pays tribute to Loughborough's 'Mr Bloom'

Gardener Harry Cook, who died on Thursday, was described as "one in a million"

UKTV: Dave and Gold among channels dropped by Virgin Media

About 4m households using the cable firm can no longer watch shows such as Taskmaster and Red Dwarf..

Politicians call for Northern Ireland abortion reform

More than 170 UK and Ireland politicians sign a letter urging the UK government to change the law

Spoiler alert: Why people love looking up spoilers

Most people avoid spoilers like the plague - but there are some who say they can’t enjoy a film or a..

Residents warned not to breach school of art cordon

People forced from their homes by the Glasgow School of Art fire are warned not to try to access the..

HMP Littlehey conditions 'lamentable', says charity

Disgraced celebrity publicist Max Clifford had complained about broken showers at HMP Littlehey
View More

More Telford News

 TV star Jim performs at pub

Television comedian Jim Tavare will perform at a Telford pub on Tuesday as..

 Legion duo in Great War remembrance event

Two members of the Oakengates and District branch of the Royal British Leg..

 Telford MP backs call to reopen Ironbridge to Birmingham rail link

Telford's MP has thrown her weight behind a campaign to reopen a railway l..

 Ironbridge trust launches £1m fundraising campaign

A £1 million fundraising campaign has been launched to ensure historic bui..

 Police issue drugs warning following two deaths in Telford

Police have issued a warning about the dangers of taking an illegal drug kn..

 The Wrekin Housing Trust strikes gold for health and safety

The Wrekin Housing Trust, based in Telford, has achieved its eighth Gold aw..
View More

Telford Businesses

Calendar Countdown

[[countdown here]]

Upcoming Events in Telford

04 Aug 2018

Practice starts at 4pm on Friday 3 August

Racing starts on Saturday 4 August at 12noon and Sunday 6 August at 10.30am


Free

View Details

04 Aug 2018

See above


Please check show links for ticket prices

View Details

04 Aug 2018

Saturday 4 August 2018

7:30pm


£35 - £45

View Details

06 Aug 2018

Monday 6 August 2018

7:30pm


£18 - £21

View Details
View More