FROM EIR DAILY ALERT
British Construction Giant Carillion Goes into Liquidation
Jan. 15, 2018 (EIRNS)—The huge British construction company Carillion collapsed this morning, after negotiations among the company, the government, and the company’s creditor banks fell through. The company employs more than 43,000 people, half of whom work in the U.K., and is involved with over 450 government projects, including high-speed rail; it also runs privatized prisons, housing for the Defense Ministry, and maintenance for Net Rail, the national rail grid. It is one of the premiere companies involved in the government privatization program. The company is said to have defaulted on £2 billion in debt.
Questions are being asked as to why the government kept giving the company contracts despite the fact that it was publicly known to be in trouble.
Bernard Jenkin, the Conservative Party chairman of the House of Commons Public Administration Committee, said, “This really shakes public confidence in the ability of the private sector to deliver public services and infrastructure.”
Mick Cash, the general secretary of the Rail, Maritime and Transport union, remarked, “This is disastrous news for the workforce and disastrous news for transport and public services in Britain.”
Carillion has debts and liabilities of £1.5 billion with creditors that include RBS, Santander U.K., and HSBC, among others. By late morning the debt figure was £2 billion, which includes a pension deficit within of £580-£900 million. Its pension fund will now be managed by the Pension Protection Fund, according to media reports.
Rebecca O’Keeffe, Head of Investment at Interactive Investor brokerage firm, warned “It is far from clear at this stage what the wider implications will be from the liquidation of Carillion, both in terms of its impact on the construction industry and on the wider economy as a whole, not least from the enormous uncertainty that now afflicts the tens of thousands of Carillion staff and those other companies directly dependent upon it.” How Many Zombie Companies Are There, Actually, in Europe?
