Carillion collapses; 43,000 jobs at risk
A UK company that was a key participant in the HS2 train project and known as the firm that runs Britain went into immediate liquidation on Monday, throwing the future of 43,000 direct employees and scores of suppliers into doubt.
Carillion, the United Kingdom's second-largest construction company, is one of the British government's largest contractors. It provides such things as the cleaning and maintenance of hospitals, the serving of school dinners, and the running of several prisons.
It was in unsuccessful talks at the weekend with the UK government's Cabinet Office and bankers, seeking an emergency 300 million pounds ($414 million).
"This is a very sad day for Carillion, for our colleagues, suppliers and customers that we have been proud to serve over many years," Philip Green, the company's chairman, said in a statement to the London Stock Exchange.
The Financial Times reported Carillion had racked up more than 900 million pounds of debts and a 587-million-pound pension deficit.
The company, which has operations in the UK, Canada and the Middle East and had revenues of 5.2 billion pounds last year, will be controlled by accountancy company PwC, which is expected to break it up and sell profitable and asset-rich parts to pay debts.
AFP reported that 19,500 of Carillion's worldwide workforce are in the UK.
The UK government said it will provide short-term funding to ensure the provision of essential services, and guarantee the immediate future of state construction projects.
In addition to its work on the HS2 project, the company manages around 50,000 homes for military personnel and is the second-largest supplier of maintenance services to Network Rail.
But, despite its huge portfolio, it has struggled with cashflow and, in July, issued the first of several profit warnings.
Opposition MPs have questioned why the UK government continued to award major public contracts to the company after its financial problems became known.
Shadow business secretary Rebecca Long-Bailey told the BBC's Today program the Labour party wants a full investigation. "This company issued three profit warnings in the last six months," she said. "Yet, despite those warnings, the government continued to grant contracts."
Vince Cable, leader of the Liberal Democrats, urged the government not to come up with a bailout. "Can't have privatization of profit and nationalization of losses."
And Mick Cash, general secretary of the RMT union, said: "The blame for this lies squarely with the government, who are obsessed with outsourcing key works to these high-risk, private enterprises."
earle@mail.chinadailyuk.com
(China Daily 01/16/2018 page11)
