HSBC called in to help stricken Carillion
Construction giant Carillion has called in HSBC to help carry out a review of the troubled construction giant.
The firm is battling for survival after a surprise profit warning declared last week sent its share price tumbling. The share price climbed on Monday, however, as much as 11% in early trading, after news it had won HS2 construction contracts and the appointment of further adviser EY to help with its turnround.
Bosses including group chief executive Richard Howson have departed the business, which has admitted that it has allocated £845m to cover problematic contracts, one of them being the £355m Royal Liverpool University Hospital, on which work temporarily halted in January. Net debt has risen sharply this year.
Carillion is the majority shareholder in Manchester developer Ask, having bought out the four founding shareholders in January 2016, and is partnering Ask and Tristan Capital Partners on the Embankment project in Salford. The firm is also part of the Airport City partnership.
Around £600m fell off Carilion’s share price, although the shares have rallied slightly on the back of HSBC’s appointment as joint financial advisor and corporate broker.
Headquartered in Wolverhampton, Carillion is one of the country’s largest construction and support services groups, with major public contracts including work with the Ministry of Defence, Network Rail and the Highways Agency.
The business has said this week it is to return its focus to the UK, abandoning a policy that has seen it pick up big ticket work in territories such as Saudi Arabia and Qatar.
Possible routes out of trouble include a rights issue, a debt-for-equity swap, and a sale of the business, with overseas investors thought to be the most likely suitors.