Carillion warning spurs pensions crisis talks

Carillion warning spurs pensions crisis talks

Carillion warning spurs pensions crisis talks

The plunge comes as the Press Association reported that lenders to the construction giant effectively rejected a rescue plan proposed Wednesday.

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

Insurance Insider also reported yesterday that trade credit insurers including Euler Herme have stopped writing new coverage for suppliers to Carillion, sending a signal the company is at risk of collapse. Its market value of 64 million pounds compares with debt and liabilities of 1.5 billion pounds, according to analysts.

Scottish Labour's shadow economy secretary Jackie Baillie called on the Scottish Government to clarify the potential impact if Carillion collapses.

"It would have major implications for the outsourced government contracts the company holds, as well as the firm's thousands of workers, those in the supply chain and those who rely on Carillion's pension fund".

The company is a major supplier to the Government, maintaining prisons across the country and managing around 900 schools.

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.

But since then its share price has plummeted and it is now valued at about £61m.

Laith Khalaf, a senior analyst at Hargreaves Lansdown, said it was likely the Scottish and UK Governments had been working on contingency plans since financial difficulties at Carillion first became clear previous year. The long-awaited route is due to be finished this year following lengthy delays.

Sky News has learnt that senior civil servants from the Cabinet Office are expected to attend an emergency summit that will also include representatives from The Pensions Regulator (TPR), Pension Protection Fund (PPF), Carillion's pension trustees and an assortment of City advisers.

"The Government, who despite warnings carried on with its programme of outsourcing public services to this company, must stand ready to bring these contracts back into public control, stabilise the situation and safeguard our public services".

A collapse of Carillion, which provides services to government departments including justice, health and education, and has built hospitals, roads and rail lines, would be felt across Britain and also in Canada and the Middle East where the 200-year-old company has worked on landmark projects.

Concerns over the potential imminent collapse of construction group Carillion has led to crisis talks over its 13 United Kingdom defined benefit (DB) schemes, according to reports.

It said the firm remained in constructive dialogue about short-term financing while "longer term discussions are continuing".

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