Carillion goes into liquidation

Published:  15 January, 2018

Construction giant Carillion is to enter compulsory liquidation with immediate effect, following months of speculation and a number of profit warnings.

Thousands of jobs are now at risk after the company, one of the largest construction businesses in the UK, failed to reach a deal with government or its lenders. The Wolverhampton-based company directly employs 20,000 people in the UK, and approximately another 23,000 staff worldwide.

The business works closely with thousands of smaller construction firms and many materials suppliers and distributors in the industry, who are likely to be severely affected by the collapse.

Carillion chairman Philip Green said this was a "very sad day" for the company's staff, customers and suppliers.

While government is now likely to step in to provide funding to ensure work on Carillion's public sector projects continue, it is unclear what will happen to many of the firm's private sector contracts, and the impact on suppliers and contractor businesses who worked closely with the business.

The Unite union has said this could put "several thousands" of jobs at risk in the wider construction supply chain.

High-profile developments the business worked on include the Royal Opera House, Channel Tunnel, the Library of Birmingham and the Tate Modern. Current projects Carillion is involved with include leading the £56 billion construction of the HS2 high-speed rail link and working with Network Rail on the Midland Mainline programme.

As well as these high-profile building projects, Carillion provides maintenance and facilities management services for both public and private sector customers, ranging from NHS hospital catering and cleaning services, maintaining 50,000 homes for the Ministry of Defence, through to providing school meals for children.

Carillion was part of the Tarmac Group until 1999, when it demerged from the business. By 2012, Carillion had an annual turnover of £5 billion. Last year, however, the company announced half-year losses of £1.15 billion and a pension deficit of £590 million.

Carillion first issued a profit warning in July 2017, after its average net borrowing increased above expected levels. The Board announced a comprehensive review of the business and began withdrawing from construction projects in Qatar, Egypt and the Kingdom of Saudi Arabia. Despite this, further profit warnings were issued in September, and again in November. Shares in the business fell 48% following November's warning, as the business said it expected to breach its loan conditions.

Accountancy firm PwC is expected to be appointed as special managers to act on behalf of the official receivers.

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