Thursday 18 October 2018

Carillion left with just £29m cash at point of collapse, says CEO

Cranes at a Carillion construction site in central London, Photo: Yui Mok/PA Wire
Cranes at a Carillion construction site in central London, Photo: Yui Mok/PA Wire

Jemma Crew and Alan Jones

Construction giant Carillion had just £29m in cash by the time it went bust, according to its interim chief executive.

The company was in talks with the UK Government to save it for months, Keith Cochrane said, adding that it was "regrettable" discussions to arrange short-term funding had been unsuccessful.

It made a "formal request" for support from the Government on December 31 following talks during the final months of 2017, he said in a High Court document seen by the Press Association as the company filed for insolvency.

Up until as recently as Sunday, directors believed that a "constructive dialogue regarding short-term funding" was under way in order to rescue the company, he said.

However, while discussions were ongoing, Mr Cochrane accused the Royal Bank of Scotland (RBS) of taking "unilateral action which in the company's view undermined the group's efforts to conserve cash".

He said the RBS asked for certain bank payments to be pre-paid, which had a negative impact on the company's liquidity by between £2m and £20m.

Two days later, on January 14, the Government denied the company's final request for help which led directors to conclude that it was insolvent.

Firms working for Carillion on private sector contracts will only have Government support until Wednesday, Cabinet Office minister David Lidington said.

The Cabinet Office declined to comment on reports that ministers were considering extending the 48-hour period of support.

Mr Lidington said on Monday the move would "give time for the private sector counterparties to Carillion to decide whether they want to accept termination of those contracts, or themselves to pay for the ongoing costs".

Carillion has public sector or public-private partnership contracts worth £1.7bn, including providing school dinners, cleaning and catering at NHS hospitals, construction work on rail projects such as HS2 and maintaining 50,000 Army base homes for the Ministry of Defence.

But its share price has plunged more than 70pc in the past six months after a string of profit warnings.

The group, which employs around 20,000 British workers, has been struggling under £900m of debt and a £587m pension deficit.

Meanwhile, unions warned that the "clock is ticking" for thousands of workers caught up in the collapse amid redundancy fears.

The Rail, Maritime and Transport union (RMT) warned ministers not to "duck and dive" over the pay and jobs of workers in private firms as well as in the public sector.

Leaders of the Trades Union Congress, Unite and GMB met Business Secretary Greg Clark on Tuesday evening and warned him that workers should not be left to "carry the can".

GMB general secretary Tim Roache said: "The clock is ticking for Carillion's 8,500 private sector workers, and the Government must now offer them reassurance and financial guarantees.

"No worker should go hungry, default on a bill or miss a rent or mortgage payment because of a crisis they did not cause."

Press Association

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