Big UK government contractor sees shares plunge on debt woes

Big UK government contractor sees shares plunge on debt woes

They added: "Based on our current trading assumptions (Dec' 18 EBITDA £188m with material downside risk) and our estimates of the mounting debt ( £1.1bn), likely additional supply chain funding/working capital unwind ( £300m) and pension liabilities (£600m), we now see no equity value".

Ministers are drawing up plans to take over prisons contracts worth £200m from Carillion, .

Administrators are reported to have been put on standby as talks about the English-based firm's future continue.

Shadow business secretary Rebecca Long-Bailey said the collapse of Carillion could "provoke a serious crisis".

Carillion has operations ranging from construction to catering, employing about 19,500 people in Britain.

Carillion also said turnaround proposals on the table were likely to cost shareholders.

"The board remains focused on seeking to deliver an outcome that will ensure that the group emerges considerably strengthened and able to continue delivering excellent service to its many public and private sector customers", statement concluded.

As well as its Scottish projects, Carillion is a major supplier to the UK Government and a key contractor in the first phase of building the £56 billion HS2 rail line.

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

The general secretary of the RMT rail union, Mick Cash, said Carillion's workers were "not responsible for the crisis".

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In addition to its rail operations, Carillion also manages almost 900 schools, provides services to the NHS and works with National Grid.

The Government is being urged to bring contracts from construction giant Carillion back into public control amid fears it could "collapse".

The company held talks with its lenders and advisers in London on Wednesday.

The firm is now under investigation by the Financial Conduct Authority over the "timeliness and content of announcements" made between December 2016 and July 2017.

"Ministers did meet yesterday, there are ongoing meetings", a spokesman for Prime Minister Theresa May said.

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 company has been pushed to the brink by cost overruns that forced it into a string of profit warnings past year and left it on course to breach the terms of its bank loans.

Shares in Carillion closed down 29 percent at 14 pence, after touching a new low of 12.5 pence and compared with a price of 240 pence a year ago.

In a note to clients, Peel Hunt's analysts said: "We suspect that given its mounting liabilities, recent press comment, growing customer worries and supply chain hesitancy that Carillion will be forced (by the banks) to accelerate its financial restructuring".

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