Carillion warns on profits again as it breaches banking covenants

Grant Prior 4 weeks ago
Share

Carillion will breach its banking covenants next month as the debt-stricken contractor announced another profit warning this morning.

Carillion has been forced to ask for extra time from its lenders while it fights to restore its balance sheet as full year debts are forecast to rise to up to £925m.

The company has been desperately trying to reduce costs and collect cash on contracts since the summer.

A disposals programme has also started with the £50m sale of its healthcare business.

But the moves have not proved sufficient and a major recapitalisation programme will take place in the first quarter of next year.

Carillion said: “In its interim results on 29 September 2017, Carillion confirmed that it was forecast to be in compliance with its financial covenants as at 31 December 2017. 

“As then indicated, compliance with its financial covenants was dependent on achieving its underlying forecasts, which assume that the normal pattern of receipts and payments continue alongside the completion of a number of PPP disposals and settlement receipts on contracts. 

” The Group now expects that a combination of delays to certain PPP disposals, a slippage in the commencement date of a significant project in the Middle East and lower than expected margin improvements across a small number of UK Support Services contracts will lead to profits for the year to 31 December 2017 being materially lower than current market expectations. 

“Given the impact of delays in receipts and disposals, the Group now expects full year average net borrowing in 2017 to be between £875m and £925m.

“Based on its latest forecasts, reflecting the items mentioned above, the Board now expects a covenant breach as at 31 December 2017. 

“Following discussions with its principal lenders and with their support, the Board has concluded that it is necessary to amend the relevant agreements to defer the test date for both its financial covenants from 31 December 2017 to 30 April 2018 by which time it expects to be implementing its recapitalisation plan.”

Wates chief executive Andrew Davies is set to take over at Carillion as its new chief executive from April.

Veteran turnaround specialist Alan Lovell has also been drafted in as a non-exective director.

Interim Chief Executive, Keith Cochrane said: “Whilst we continue to target cash collections, reduce costs, execute disposals and focus on delivering for our customers, it is clear that significant challenges remain and more needs to be done to reduce net debt and rebuild the balance sheet. 

“Constructive dialogue is continuing with our financial stakeholders, and I am grateful for their support. 

“I remain focused on addressing this issue before my successor, Andrew Davies, takes up the role on 2 April 2018.”

Carillion’s share price crashed more than 50% in early trading to just 18p – valuing the business at £73m.

Latest news

Carillion woes hit King’s Cross office project

Hunt on for a new contractor to deliver 11-storey office scheme
2 days ago

Persimmon chairman resigns after bonus controversy

House builder admits £100m+ bonus plan should have been capped
2 days ago

Green light for 1,300 homes at Nestlé factory

Barratt London to build 1,300 homes at former factory site in on outskirts of west London
2 days ago

Galliford Try lands £54m Manchester Airport project

Contractor wins second taxiway project on £1bn airport upgrade
2 days ago

Czech facade specialist starts £60m London job

Sipral starts Canary Wharf residential twin towers for Ecoworld Ballymore jv
2 days ago

McLaren gets start date for £58m Banbury shopping centre

Construction to begin in February on Castle Quay expansion
2 days ago

Winners named for £400m infrastructure consultancy

Costain and Mace among line-up for Crown Commercial Services infrastructure framework
2 days ago

Contractor in court after workers exposed to silica dust

Safety inspectors find workers dry cutting bricks in a basement
2 days ago

Betting Spy: David Moyes – an apology

The West Ham boss is working his magic and the Irons are a good bet away at stuttering Stoke
2 days ago

Boost your online presence with the new Enquirer Directory

New site for suppliers and buyers will showcase their products, services and latest stories
2 months ago

Crossrail site protest as Balfour lays off 50 sparks

Contractor insists redundancies are unconnected to £5,000-a-head finishing bonus demands
4 days ago

Interserve seals £180m lending deal for extra headroom

Debbie White seals deal for more time to restructure business
3 days ago

Severfield lands steelwork package for Google HQ

Specialist to start work in June for main contractor Lendlease at King's Cross site
3 days ago

Kier secures £138m London health deal

Kier P22 work haul soars to £400m
3 days ago

Scape research reveals need for huge school building push

Procurement body calls for national school building strategy
3 days ago

Carillion wins another £11.6m rail electrification deal

Network Rail awards station upgrade deal on Glasgow to Edinburgh route
4 days ago

Galliford Try wins £24m M49 junction

Work to start on new junction at Avonmouth in the New Year
3 days ago

Costain director joins pipe-lining specialist

Tim Bowen takes the helm at Aquam to deliver ambitious expansion plan
4 days ago

Highways England to trial self healing roads

Sunflower oil capsules in asphalt could save £260m a year
4 days ago

Tarmac swaps quarries for Breedon concrete plants

Tarmac offloads four quarries for 27 Breedon ready-mixed concrete plants
4 days ago

Mace wins £140m London School of Economics project

Work to start on Marshall building once McGee completes demolition in the spring
4 days ago

Construction start date for £350m Tower Hamlets site

Planning go-ahead for Galliard Homes and Lindhill at Ailsa Wharf
4 days ago

Specialist Mick George moves into housebuilding

Civils contractor forms joint venture to target housing market
4 days ago

Fusion21 launches £150m sprinkler supplier panel

Local authorities and housing associations call for post-Grenfell preferred supplier list
4 days ago

Ardmore wins £77m Stratford hotel contract

Two-year build programme gets underway at the 18-storey Gantry development
5 days ago

Lovell to start £30m Doncaster Lakeside scheme

Eastern division boasts £100m forward order book from string of schemes
4 days ago

Balfour Beatty on track for 2-3% margin by late 2018

Leo Quinn confident of paying down borrowings as they fall due in 2018
5 days ago

Skanska and Multiplex eye £100m City fringe office job

Aldgate Developments prepares to start £100m phase 2 office complex
5 days ago

Speller Metcalfe wins “non-confrontational” £16m contract

Contractor to start revamp of Derby Silk Mill next year using innovative procurement model
5 days ago

Plans for new £80m library at University of Bristol

Design team appointed as construction set to start in summer of 2019
5 days ago

Contractor services