Carillion Faces Pivotal Showdown With Lenders on Wednesday to Safeguard Future

Photo by Terry Robinson via Wikimedia Commons

Carillion, the troubled contractor, is about to face a pivotal showdown with lenders next Wednesday, hoping to convince the lenders to fill a massive funding gap and safeguard the future of the company and its 50,000 global workforce.

The company, which has its headquarters at Wolverhampton, is set to present a business plan to a syndicate of lenders that is led by Barclays, HSBC, and the Royal Bank of Scotland on the 10th of January.

Carillion insists that the plan will present the foundations for a turnaround that it hopes will prevent a share slide that observed 90 percent of stock market valuation washed away in 2017.

Earlier this afternoon, Sky News quoted some sources stating “the next two weeks are critical” for the company. It was reported that the current funding gap of Carillion runs into hundreds of millions of pounds.

EY has been assisting the management of Carillion since July, rendering crisis management and aiding to maximise cash coffers.

Carillion had bound its hopes on raising £300m through a sale of its assets, a majority of which it was expected would be realised from sales made in Canada. However, while some smaller operations in the United Kingdom have already been sold, the company was not able to manage to beat subsidiaries across the pond.

The London-listed company is due to pay back an emergency funding amounting to £40m by the end of April. Last autumn, lenders extended cash amounting to £140m in the hope that it would provide the HS2 contractor with enough breathing space. The remaining balance of £100m must be repaid by the end of 2018.

Earlier this week, the Financial Conduct Authority (FCA) revealed a probe into Carillion regarding its stock market communication in the months before the shock announcement in July of contract write-downs amounting to £845m.

The investigation followed a report exposing the depth of the problems that are faced by the company and how hedge funds were apparently aware of them well even before last summer.

Today, a spokesperson from Carillion stated: “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 10 January 2018, 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.”