Despite the headlines professing Armageddon the reality will be a damp squib. If Carillion fail it will just be like the collapse of Jarvis
The folks who are likely to be out of pocket are employees who are let go and anyone left with a part finished construction projects (excluding the PFIs)Posted 3 months agocranberryMember
The lying Tories did sweet fanny bugger all when Tata Steel in Redcar shut down, no help whatsoever.. not even a visit by your “friendly, call me Dave” no correspondence in the slightest.
They all sat perving porn on their MPs computers and sending interns out to collect vibrators, standing up in front of the public and spewing out lies. And appeasing and supporting racism, and subsequently covering themselves in a thin veil of deceit.
The government should stay clear of anything important, clearly incompetent rudderless backbone missing self serving brown nose each other Burlington club kick a homeless person whilst they’re down types.
u OK hun ?Posted 3 months agofrankconwaySubscriber
Have worked fot them 4 times ad s contractor – in fm, building services, defence & rail.Posted 3 months ago
Lots of good people.
Centrally determined and implemented policies; too little consideration of the implications.
Extended payment terms for subbies.
Aggressive bidding in competitive tenders.
Poor risk management – including inadequate risk pots.
Some bad luck – bad debts in middle east.
Poor planning on 3 major pfi jobs.
What could possibly go wrong?
Carillion made an opportunistic bid for Balfour when they were struggling.
Carillion have won no friends by their behaviour.
Competitors are waiting for the right time – and an even more competitive take-out price.
Sad, really when they could have done so much more and better.
Can anyone please explain what it means to an employee if the company has a pension deficit and how you can find out if your own company has one also?
Its a snapshot but indicates, if the company sponsor goes bust, there is a risk than there will be insufficient funds to pay all its accrued pensions. There is a government protection scheme, which is explained here. There will be a note in the company’s accounts (normally towards the end) which will outline the present position including sensitivities on changes in assumptions. Only DB schemes.Posted 3 months ago
Well some here have been busy on BBC, Sky New and the random papers. I have been involved in Carillion for a long time, work directly in the industry and know what they are doing to resolve this.
1. Shareholders have already taken a colossal hit on this, the net value fell from over £1bn to £85m in a matter of a few weeks back in August/September, private investors and pension funds lost 92% (based on Fridays closing price of 14p). Vince cable is going for political points but is way off the mark. Carillion have a rescue package and it now involves a debt for equity swap. Put simply this equates to a debt write down to Santander and Lloyds for issuing a huge amount of new shares. Small private investors (of which I am one) and pension funds were wiped out in a few hours on Friday afternoon. A rights issue would not work at current share price and no lender will throw new money at this.
2. Why is Carillion in trouble? Well this is complex – main reasons are going lump sum (NEC3 Option A or Option C) on several big projects recently. Carillion miss-priced risk on the Aberdeen bypass and payed badly for this. Smethwick Hospital and Liverpool Hospital hit them hard due to overruns and miss-pricing. Carillion was the most shorted stock for almost 2 years (26% on short at one point). Information was leaking out the company and the city smelt a rat. The share was manipulated down by a collection of huge hedge funds (Blackrock investments etc.) and this put the company in real trouble. The practice of “shorting” is banned in Germany but Mr Cable made no mention of this. The UK allows huge hedge funds to ruin companies and the employees are the ones who will pay. There are some city hedge funds that made hundreds of millions out of the collapse of this company.
3. Will Carillion go bust = No in a nut shell, and it will not receive a penny of public money either. The BBC, Sky et al need to reel it in a bit. On Sunday/Monday evening an RNS is expected from the company saying a pre packed “debt for equity” has been agreed. Carillion staff would not be eligible to TUPE across as their contracts are not being bought out. If it goes bust the employees walk with nothing. I went through TUPE 5 months ago on the UK’s largest construction site and it is not nice.
4. Can the government run Carillion’s contracts = Not a chance! You cannot easily break a JCT or NEC3 contracts without paying heavy penalty clauses (X16 retention clause). The only way to strip the existing contracts is when Carillion call in the administrators (which has not happened here) or they underperform (which has not happened either). How would the government get hundreds of Project Managers, Quantity Surveyors, Contract managers, Civil Engineers in the next few weeks?? Local job centre? I went through all this around 10years ago with the breakup of Metronet, it ended badly for all concerned.
5. What about the Carillion board = well they (Keith Cochrane, Richard Howson and Philip Green (not the famous one!) were rats of the highest order. Howson walked back in July. Cochrane is gone next Friday and Green has gone. They leave the bones of a company. They still get their £1.5 million annual salary (Howson’s) for the next 12 months.Posted 3 months agokm79Member
Its a snapshot but indicates, if the company sponsor goes bust, there is a risk than their will be insufficient funds to pay all its accrued pensions. There is a government protection scheme, which is explained here. There will be a note in the company’s account (normally towards the end) which will outline the present position including sensitivities on changes in assumptions. Only DB schemes.
Thanks meftyPosted 3 months ago
I’m not saying that Carillion should be saved. I am saying that maintenance of vital infrastructure will require significant public expenditure. I spent some time last week on a Carillion PFI contract and unpicking it is far from easy.
As I said before structurally there should be mechanisms in the contract structure to mitigate any risks. Whilst it will not be painless, there should not be major increases in the cost – that would certainly have been the intent.Posted 3 months agoPoopscoopSubscriber
Tory’s won’t bail out the NHS which exists to save lives.
Therefore a construction company should be left to burn by the same logic.
However… In reality the Tories will care far more for a construction company that some of them have vested interests in at some level no doubt.
Hence, it will be bailed out I reckon.Posted 3 months ago
If coconut is right and there has been a debt for equity swap then everything carries on as normal, the existing equity has borne the cost through their dilution, which is what is supposed to happen, and the banks have taken the view that owning equity is the best way of maximising the recovery of their outstanding liabilities.Posted 3 months ago
Yes Mefty – That’s exactly what is happening (not 100% there yet but this is the only way it can end).RNS released by Carillion on Friday at 6pm
Carillion plc (“Carillion” or the “Group”) met with representatives of its creditor groups to present its business plan on 10 January 2018. Further to this presentation, Carillion continues to engage in constructive discussions with a range of financial and other stakeholders regarding options to reduce debt and strengthen the Group’s balance sheet. Suggestions that Carillion’s business plan has been rejected by stakeholders are incorrect. It is too early to predict the outcome of these discussions but Carillion expects that any such agreement is likely to involve the raising of new capital and the conversion of existing financial indebtedness to equity which would result in significant dilution to existing shareholders. As part of its engagement with stakeholders, Carillion is in constructive dialogue in relation to additional short term financing while the longer term discussions are continuing.
The Board remains focused on seeking to deliver an outcome that will ensure that the Group emerges considerably strengthened and able to continue delivering excellent service to its many public and private sector customers.Posted 3 months ago
The UK news loves a good loser and a hard selling story
Well a story that involves the NHS at threat is always good for sales, I must admit I haven’t really followed it but debt for equity would seem be the obvious solution because otherwise all the long term profitable contracts would be lost as presumably there are tear up rights in the event of insolvency. But presumably the banks were assumed to have the power to put it into insolvency, otherwise the equity holders could have held out?Posted 3 months ago
Debt for equity offers the banks a chance to recoupe the money owed (£950 million), administration and everyone walks away with nothing. CArilloins tangible assets are low but their new profit margins are good (typically 5 to 8% for civils and 3 to 5% for new builds). Carillion had their covenants extended to April 2018, just before Christmas. Their debt repayment runs at about 10%. By going debt for equity they will not pay significant coorporation tax for the next few decades (like many companies in debt). They need a bridging loan of around £50million to pay wages. This company will be saved by the private sector and must be saved!
Funny how we already prop up EDF Energy on Hinkley Point, Virgin on the East Coast mainline and Welsh Steel at Port Talbot… but todays kicking is reserved for Carillion… but hey Balfour Beatty were here 2 years ago and before that it was Wimpy and Barret Homes.. etc..Posted 3 months agodazhSubscriber
This company will be saved by the private sector and must be saved!
”But the banks, headed by HSBC, Barclays and Santander, have yet to agree on a restructuring plan and are understood to be reluctant to pour in new funding unless Downing Street takes part in a bailout.”
Totally agree is should be saved but this doesn’t sound like the private sector doing it.Posted 3 months ago
Lots of good people…
…Aggressive bidding in competitive tenders.
Poor risk management – including inadequate risk pots….
Carillion are far from alone in this. Several other competitors who operate in the same sectors are similar but haven’t been bitten so hard or exposed yet.Posted 3 months agoprojectMember
Carrilion van passed me today, sticker on the back said ZERO HARM, idiot driving obviously hadnt read it as he overtook and swerved left into a mcdonalds,
If it does go bust who is going to organise the multitude of contrators and suppliers being transferred to new companies, and what happens if they dont move, but just stay off work as a protest, also will suppliers who havent been paid be willing to supply the same subies on a new contract.Posted 3 months ago
I worked for Atkins as part of the Metronet PPI around 10years ago. I am really rooting for Carillion too. This is still a profitable company with a huge forward order book (£16bn in the pipe line). Carillion won all the government contracts in fair and open market, but are being made out to be some demon company who is now screwing the government over. An announcement will come from carillion tomorrow confirming their future, I still believe/hope it will be rescued privately.Posted 3 months agoblurtyMember
Aberdeen Western Bypass is a PFI type deal; if Carillion goes bust the banks will step in to preserve their investment. The other partners will be severally liable/ entitled too, so will probably go on in any event, and the banks not need to step in.
Not sure why AWB has been such a disaster, but it’s a good example of the upside of PFI, from the public’s point of view – when it all goes tits up, the consortium has to soldier on and the public has a fixed price contract.Posted 3 months agowoody2000Subscriber
private companies must stand and fall on their own
Unless they’re banks. Today will be interesting, the company I work for has had a working relationship with Carillion for a long time and we had some work in the pipeline with them. Bad payers occasionally, but on the whole decent to work with.Posted 3 months agothelawmanMember
No doubt this is something that aP and Coconut already know (as they are clearly close to Carillion, or local to the W Mids area, or both), but Sir Vince of Cable was way out on at least one of his recent soundbites, it may have been on Saturday morning. Carillion have not in any real sense been ‘better known as Tarmac’ for a very long time.Posted 3 months ago
18, maybe 19 years ago, there was a division of Tarmac PLC called Tarmac Construction. It operated alongside the Quarries Division, the International Division, the Housing Division, the Industrial Division and a couple of others; for perfectly sound commercial reasons at the time, mainly around focussing on core businesses, Construction was hived off into a completely independent business which floated its own share capital and took on the brandname Carillion. It’s been absolutely nothing to do with Tarmac, apart from being a customer of their quarries and concrete businesses, ever since.
A bit like not believing everything you read on the internet – don’t believe everything a politician says!gavinpearceMember
Public procurement contracts always let to the cheapest…. this leads to crazy cost cutting to win the contracts in the first place and huge costs to actually get that far. There is no desire for quality. It’s no surprise that these things happen as the margins for error are so slim. Terrible for everyone involved. Fingers crossed they can all get jobs.Posted 3 months agodazhSubscriber
Sad news this morning. It seems the victims of govt penny pinching are not limited to the sick and unemployed. It raises huge questions of the relationship between govt and industry. Why do firms like carillion take on these loss making contracts which put the whole company at risk? I’m not sure I believe it’s only down to poor management. There’s something rotten somewhere.Posted 3 months agoMing the MercilessSubscriber
I feel sorry for the workers/pensioners and contractors affected by this. No doubt the Directors will be sliding smoothly into new positions in the next few weeks 👿
There really should be a public flogging post for people that screw up pensions (this includes the political leaders from Thatcher onwards that ignored the growing ageing population problem).Posted 3 months ago
I just want to say that this is probably going to be a really tough time for many of the staff and subbies and I wish you all the best. I hope things get sorted out soon.
Very much this. I have friends and former colleagues working for them and my fingers are massively crossed for them.Posted 3 months ago
Sad news this morning. It seems the victims of govt penny pinching are not limited to the sick and unemployed. It raises huge questions of the relationship between govt and industry. Why do firms like carillion take on these loss making contracts which put the whole company at risk? I’m not sure I believe it’s only down to poor management. There’s something rotten somewhere.
Also this. Seen at first hand in the same sectors – construction, hard FM, soft FM and provision of other services to government.Posted 3 months agotjagainMember
Carrillion have taken over a billion pounds out of the system – thats why they are going bust. all the money paid to shareholders and stolen from the pension fund. should be jailed every last one of the directors.
Why do firms like carillion take on these loss making contracts which put the whole company at risk?
Because they can remove large amunts of money from the system and then go bust deliberatly to avoid their liabilities. Its theft pure and simple.
they would no be going bust if they hadn’t taken all that money in profits and given it to shareholders but instead put it into wages and pension payments. the going bust is a deliberate action to avoid their liabilities and to protect the fortunes the board and shareholders have stolenPosted 3 months ago
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