The government is preparing for the collapse of the UK’s second largest construction firm, Carillion, after the company entered talks with creditors on Wednesday to save the troubled company from bankruptcy.
The contractor, which has seen its share price plunge over the last year after issuing three profit warnings in a five month period, is also under investigation from the Financial Conduct Authority for “timeliness and content of announcements” made in the summer of 2017.
It entered last-ditch talks with creditors on Wednesday, including HSBC and Royal Bank of Scotland, to encourage them to back restructuring plans. However, on Thursday it emerged that the UK government has drawn up contingency plans for the collapse of the company, which is one of the largest contractors in the government’s HS2 rail programme.
Carillion’s has faced financial difficulties over the last year, dealing with net debts of roughly £900 million and a pension deficit of £590 million. These massively outweigh its stock market valuation of less than £100 million.
Oliver Dowden, the Cabinet Office parliamentary secretary, said in Parliament that the government has made “contingency plans for all eventualities … Carillion is a major supplier to the government with a number of long-term contracts. We are committed to maintaining a healthy supply market and working closely with key suppliers.”
Carillion shares sunk another 15 percent on Thursday, currently trading down 15.18 percent at 19.17 (1208GMT).
