(Reuters) - Britain’s Carillion (CLLN.L) announced the departure of its finance chief along with a series of changes to its management on Monday as the crisis-hit construction services company tries to stabilise its business and rebuild its balance sheet.
Carillion has lost nearly 80 percent of its market value since mid-July when it booked an 845 million pound writedown on problematic construction contracts announced the departure of its chief executive.
CFO Zafar Khan will step down with immediate effect, to be replaced by Emma Mercer, the finance head of its UK construction business.
It has also appointed Andy Jones, who heads its Canadian business, as group chief operating officer, to replace Richard Howson, who leaves at the end of this month.
The company has brought in Lee Watson, on a secondment from auditors Ernst & Young LLP, as its chief transformation officer in addition to a string of resignations, including that of its strategy director.
Carillion also confirmed that it has hired Teneo Blue Rubicon to handle its financial public relations after parting ways with scandal-hit PR firm Bell Pottinger.
Khan’s departure comes two months after Howson, currently serving as COO, was ousted as chief executive after the company warned on full-year profits, citing difficult markets and a deterioration in some contracts.
The company declined to say what payout would be made to Khan, who was drawing an annual salary of 425,000 pounds. According to its last annual report, such severance payments are limited to no more than one year's salary along with benefits such as car allowance, private health insurance and pension contributions. (bit.ly/2xfBL9f)
Carillion, which helps to maintain British railways and roads, said in July that payment problems on four construction contracts nearing or reaching completion had forced it to take a provision of 845 million pounds.
There has been speculation that the company may have to raise at least 500 million pounds and could announce a rights issue alongside its results on Sept. 29.
Carillion’s troubles have been compounded by its debt pile and pension obligations and trouble collection cash from clients.
Winning new contracts had become harder as spending in the Middle East adjusts to lower oil prices, and the firm had also experienced some delays in UK public spending decisions since Britain voted to leave the European Union.
Rail and property services are areas Carillion has said it wants to focus on as it seeks to turn itself around.
Analysts at UBS said the board changes support the company’s turnaround but call the timing of the announcement “somewhat odd”, given that the company will report results at the end of the month.
UBS, which rates the stock a “sell”, warned again that the outcome for shareholders from a restructuring and recapitalisation exercise is “highly uncertain”.
Shares in the company were down 3.3 percent at 42.12 pence in morning trade, having initially fallen more than 7 percent.
Reporting by Rahul B in Bengaluru, editing by Louise Heavens