Carillion Denies Restructuring Plan Rejection Amid Share Collapse

LONDON (Alliance News) - Carillion PLC denied Friday its recapitalisation and restructuring ...

Alliance News 12 January, 2018 | 6:28PM
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LONDON (Alliance News) - Carillion PLC denied Friday its recapitalisation and restructuring plan had been rejected by stakeholders, following press reports it had been rejected.

The troubled support services firm said it "met with representatives of its creditor groups" on Wednesday to present its business plan. It emphasised it "continues to engage" in "constructive" discussions with a range of financial and other stakeholders about "options to reduce debt and strengthen the group's balance sheet."

"Suggestions that Carillion's business plan has been rejected by stakeholders are incorrect", the company emphasised.

"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," Carillion explained in a statement.

"As part of its engagement with stakeholders," the company continued, "Carillion is in constructive dialogue in relation to additional short term financing while the longer term discussions are continuing."

The company added it was "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."

On Friday, Carillion's shares fell a further 29% to 14.20 pence, after a tough 2017 which saw its share price repeatedly hit by several profit warnings and other events. Carillion's share price has fallen from 192.10p prior to the first profit warning in July to just 14.20p on Wednesday, a stomach-churning 93% drop.

Carillion issued its first profit warning on July 10, 2017 when it warned it would need to make a huge GBP845.0 million provision against its contracts. In response, Carillion cut its generous dividend and its long-standing Chief Executive Officer Richard Howson - in the post since 2012 - resigned.

Further profit warnings were issued in September and, most recently, in November. In September, "disappointing" half-year results saw Carillion sink to a pretax loss of GBP1.15 billion from a profit of GBP84 million the year prior amid further impairments. Carillion responded by lowering its profit forecasts further.

In November, Carillion reported full-year profit will be "materially" lower than expected after it experienced a combination of delays to disposals of certain public-private partnership deals, and a "slippage" in the start of a "significant" project in the Middle East in addition to lower-than-expected margin improvements across a "small" number of UK support services contracts.

The November profit warning represented its third in just five months.

The share price fall saw the company demoted from the FTSE 250 index in the August 2017 review. Having once carried a more than GBP1.60 billion market capitalisation at its peak in February 2014, it is worth just over GBP61.1 million.

In late December, Carillion announced that its CEO-designate Andrew Davies would join the troubled firm three months earlier than originally thought. Carillion said Davies would join on January 22, having originally been expected to come aboard on April 2.

Earlier in January, Carillion also discovered it was under scrutiny from the UK Financial Conduct Authority regarding "timeliness and content" of it financial statements leading up to its July 2017 profit warning.

By Ahren Lester; ahrenlester@alliancenews.com.

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Securities Mentioned in Article
Security Name Price Change (%) Morningstar
Rating
Carillion PLC 14.20 GBX -28.95 -
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