Carillion is to enter compulsory liquidation after failing to reach an agreement with lenders to keep it afloat, putting major government contracts and thousands of jobs at risk.
In a statement, the company said: “Carillion continued to engage with its key financial and other stakeholders, including the government, over the course of the weekend regarding options to reduce debt and strengthen the group’s balance sheet.
“As part of this engagement, Carillion also asked those stakeholders for limited short term financial support, to enable it to continue to trade whilst longer-term engagement continued.
“Despite considerable efforts, those discussions have not been successful, and the board of Carillion has therefore concluded that it had no choice but to take steps to enter into compulsory liquidation with immediate effect.”
However, Carillion said it understood that the government would be “providing the necessary funding… to maintain the public services carried on by Carillion staff, subcontractors and suppliers”.
Meetings were this week between Carillion and its lenders in a bid to agree on rescue plan to save the troubled contractor.
Government officials also met over the weekend to discuss the future of the firm.
The BBC reported that banks were reluctant to lend Carillion more money unless they can get guarantees from the government, the contractor’s biggest client.
Carillion is the second biggest contractor in the UK by turnover, employing 43,000 people globally.
It is part of the CEK JV selected to deliver two packages of HS2 phase one under a £1.4bn deal and is also on several major government construction and FM contracts.
PwC has been appointed to carry out the liquidation.
Carillion chairman Philip Green said: “This is a very sad day for Carillion, for our colleagues, suppliers and customers that we have been proud to serve over many years.
“Over recent months huge efforts have been made to restructure Carillion to deliver its sustainable future and the board is very grateful for the huge efforts made by Keith Cochrane, our executive team and many others who have worked tirelessly over this period.
“In recent days however, we have been unable to secure the funding to support our business plan and it is therefore with the deepest regret that we have arrived at this decision.
“We understand that the government will be providing the necessary funding required by the official receiver to maintain the public services carried on by Carillion staff, subcontractors and suppliers.”
Kier boss Haydn Mursell has said Carillion’s HS2 joint venture partners have a contingency plan in place on the project – which could include the transferring of staff – in the wake of Carillion’s collapse.
Construction News understands the UK taxpayer is not exposed on loans provided by the UK government for Carillion projects in the Middle East.
Reference: Construction News
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