Wednesday 17 October 2018

HS2 firm Carillion reaches deferral agreement

Carillion said on Friday that the test date has been moved from December 31 to April 30 next year.

Carillion profit warning
Carillion profit warning

By Ravender Sembhy, Press Association City Editor

Infrastructure giant Carillion has struck an agreement with its lenders to defer a crucial financial covenant test, a development that will give the troubled group more breathing space.

The company, which is embroiled in an ongoing crisis that has involved a string of profits warnings as it scrambles to reduce its debt, said on Friday that the test date has been moved from December 31 to April 30 next year.

In November, the HS2 contractor issued its latest profit warning and said it will breach its debt covenants, which resulted in another share price collapse.

The firm said at the time that annual profits are set to be “materially lower than current market expectations” as it grapples with a string of delays and smaller-than-expected improvements to margins on certain contracts.

Interim boss Keith Cochrane said: “We believe that our lenders’ decision to defer the test date demonstrates their continuing support.

“We remain focused on actively progressing a constructive dialogue with our financial stakeholders on the group’s recapitalisation plans.”

Carillion added that it is continuing discussions with stakeholders regarding its options to reduce net debt and recapitalise or restructure the group’s balance sheet.

It added that it will determine which approach to take during the first quarter of 2018.

Earlier this week, the group parachuted its new chief executive into the firm earlier than previously planned.

Carillion said on Wednesday that Andrew Davies’ start date will now be January 22, rather than April 2.

Mr Cochrane will step down from his role in January, but will remain with Carillion in an advisory capacity to ensure an orderly transition, the firm added.

Press Association

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