Carillion: shares hit record low on fear of administration

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Carillion is a major supplier to the Government and key contractor in the first phase of building the £56 billion HS2 rail line, but has seen its share price plunge almost 80% in the past six months after making a string of profit warnings and breaching its financial covenants.

Carillion - the UK's second-largest construction company - is engaged in crunch talks with the UK Government and the Pensions Regulator in an attempt to avoid going into administration.

Her views were echoed by Unite union assistant general secretary Gail Cartmail, who said: "The government must consider all options while the future of Carillion hangs in the balance, including bringing contracts back in-house".

Carillion also has major contracts to supply facilities management at 83 military sites in Scotland, as well as a 28-year contract managing the "elderly beds facility" at Glasgow's Queen Elizabeth University Hospital. We urgently need to know just how exposed the Scottish Government and the public purse is if Carillion were to collapse.

Sir Vince, a former business secretary, told BBC Breakfast: "They've got to force the shareholders and indeed the creditors, the big banks, to take losses, and then the government can take responsibility for taking the contracts forward and making sure they are delivered".

The company provides vital services to hundreds of schools.

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.

The rescue plan shown to lenders on Wednesday includes handing back some loss-making contracts, revising the terms of others and potentially accepting financial support from the Government if it can not secure it from private sector sources.

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Carillion has a pension deficit of roughly £580m, although this figure would be expected to rise sharply if measured according to the cost of insuring its various retirement schemes on a full buyout basis.

"You can see that one the one hand, it's in everybody's best interest that Carillion continues, but at the same time it's hard to chart a way forward". It is also a key contractor on the £56bn HS2 rail project.

Carillion's worsening health could put some of its 19,500 United Kingdom employees' jobs at risk.

The Guardian's website reported shadow business secretary, Rebecca Long-Bailey, as saying: "The collapse of Carillion could provoke a serious crisis".

Carillion is holding crisis talks with United Kingdom government representatives on Friday, which Sky News said were aimed at safeguarding the more than 28,000 pension scheme members who face potential cuts to retirement payments should Carillion fail.

A spokesperson for the Pensions Regulator said the organisation remained "closely involved" in discussions with Carillion and the trustees of its pension schemes.

The future of troubled engineering company Carillion is being discussed at high-level government meetings this weekend, the BBC understands.

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