January 6, 2018 / 3:56 PM / a year ago

UK's Carillion speeding up rescue talks with banks - Sky News

Jan 6 (Reuters) - British building and services company Carillion is due to hold emergency meetings with its bankers in the coming days as it speeds up its search for a financial rescue plan, Sky News reported on Saturday.

Carillion, which is involved in infrastructure projects for the British and other governments including Britain’s planned high-speed rail link HS2, has been fighting for its survival after costly contract delays and a downturn in new business.

It is also under investigation by regulators over “the timeliness and content” of statements it made before it issued a profit warning last year.

Sky News, quoting unidentified sources, said Carillion’s rescue plan would involve handing back loss-making contracts, revising the terms of others and possibly accepting government financial support if it cannot secure private funding.

That could be a loan on commercial terms, a deal to reprice some contracts, or to allow Carillion to hand back loss-making work to the government, Sky News said.

A spokesman for Carillion declined to comment on the report.

Analysts have estimated the company has debt including provisions, pensions and accounts payable of about 1.5 billion pounds ($2.04 billion) compared with its market capitalisation of about 70 million pounds, according to Thomson Reuters data.

In December, Carillion said discussions with stakeholders regarding its options to cut debt and avoid a breach of debt covenants were “progressing well”.

Sky News said the company faced a funding gap of hundreds of millions of pounds and the precise size of the shortfall depended on whether it was able to get out of loss-making contracts. The company’s lenders included Barclays, HSBC and Santander UK, it said.

Carillion, which operates in Canada and the Middle East as well as Britain, last month brought forward the start date for new chief executive Andrew Davies to Jan. 22. ($1 = 0.7370 pounds) (Writing by William Schomberg; Editing by Angus MacSwan)

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