Carillion, the UK’s second largest construction company, is set to enter liquidation after emergency talks with banks and the government ended in failure
The firm, which employs around 43,000 people worldwide, manages schools and prisons and maintains thousands of homes for MoD. It is also the second biggest supplier of maintenance services to Network Rail and a key contractor on the HS2 high-speed rail project.
Carillion’s collapse means the government will have to step in with funding to keep some public services running.
“All employees should continue coming to work, you will continue to get paid. Staff that are engaged on public sector contracts still have important work to do,” Cabinet Office minister David Lidington said.
Despite a turnover of around £5bn, Carillion was crippled by massive debts after making significant losses on key contracts. It issued a profit warning last July and launched a “comprehensive review of the business”.
Earlier this month, the Financial Conduct Authority announced an investigation into the “timeliness and content” on statements issued by the company in the run-up to the profit warning.
The Official Receiver has been appointed as the liquidator of Carillion. It is expected to apply to the High Court for PwC to be made special managers to act on its behalf.
In a statement to the Stock Exchange, Carillion chairman Philip Green said it was a “very sad day”.
“Over recent months, huge efforts have been made to restructure Carillion to deliver its sustainable future,” he added.
“In recent days, however, we have been unable to secure the funding to support our business plan and it is therefore with the deepest regret that we have arrived at this decision.
“We understand that HM Government will be providing the necessary funding required by the Official Receiver to maintain the public services carried on by Carillion staff, subcontractors and suppliers.”