Scots projects at risk as Carillion rescue plan rejected

Scots projects at risk as Carillion rescue plan rejected

Senior ministers met on Thursday to discuss the future of construction giant Carillion, amid fears the struggling firm is approaching collapse. This includes a £23m deal to extend platforms at Edinburgh Waverley train station.

Carillion is also involved in two UK-wide Ministry of Defence contracts for facilities management that cover nearly 20 Scottish sites including Dreghorn Barracks in Edinburgh.

Ministers reportedly discussed the contingency plans in place should Carillion collapse, news of which first emerged on Wednesday during Cabinet Office orals.

A source said it had "dipped the toe" and "had conversations" with alternative developers and service providers.

Administrator firms PwC and EY were also reported to have been put on standby as talks about the firm's future carry on.

Gail Cartmail, Unite assistant general secretary, said Carillion's workforce was being "held hostage by the whims of the market".

United Kingdom shadow business secretary Rebecca Long-Bailey said: "The collapse of Carillion could provoke a serious crisis".

Carillion has a pension deficit, it said, of around GBP580.0 million.

The Wolverhampton-based firm's precarious finances are the focus of a meeting between the UK Government, pension authorities and stakeholders on Friday, which will attempt to negotiate a package to help it avoid collapse.

"In particular, we need to know that there is no threat to the cost and completion of the Aberdeen Western Peripheral Route, an issue I raised with the Cabinet Secretary months ago".

The group - which was demerged for Tarmac in the late 1990s - is a major supplier to the government with contracts across education, the NHS and the rail industry, including HS2.

The firm has seen its share price plunge almost 80 per cent in the past six months after making a string of profit warnings and breaching its financial covenants.

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".

He said it was a "pretty messy situation", adding: "The situation is pretty bleak".

"It has also confirmed that Carillion has no intention of withdrawing from the AWPR/B-T project and that they too remain committed to completing it in accordance with the contract". The long-awaited route is due to be finished this year following lengthy delays.

The pensions regulator would not comment on whether it was attending specific meetings, but a spokesman said: "We have been and remain closely involved in discussions with Carillion and the trustees of the pension schemes as this situation has unfolded".

Any agreement was likely to involve the raising of new capital and the conversion of existing debt to equity, which would result in "significant dilution to existing shareholders", it said in a statement.

The troubled contractor said it "continues to engage in constructive discussions with a range of financial and other stakeholders regarding options".

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