Carillion PLC (LON:CLLN) has confirmed its collapse after the failure of talks with its key financial and other stakeholders, including the UK government over the course of the weekend and has taken steps to enter into compulsory liquidation with immediate effect, with its shares temporarily suspended as a result, from 7.45am today.
In a statement this morning, the embattled construction firm said, despite considerable efforts, its discussions have not been successful, and the board of Carillion has therefore concluded that it had no choice but to make an application was made to the High Court for a compulsory liquidation of Carillion before opening of business today.
It added that an order has been granted to appoint the Official Receiver as the liquidator of Carillion, with the group anticipating that an application will be made to the High Court for PricewaterhouseCoopers to be appointed as Special Managers of the business.
Philip Green, Carillion’s chairman, said: "This is a very sad day for Carillion.”
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."
The FTSE small cap firm saw its shares drop nearly 30% in value on Friday after a week of speculation about its future which started positively on hopes that a new business plan put forward by the firm could be agreed or a government rescue organised, but ended badly amid rumours that its lenders had rejected the group’s proposals.
Refuted talk plan rejected on Friday
In a statement released after the London market close on Friday, Carillion confirmed that it met with representatives of its creditor groups to present its business plan on 10 January 2018 but had refuted the suggestions that its plans had been rejected.
The group said then: “Further to this presentation, Carillion continues to engage in constructive discussions with a range of financial and other stakeholders regarding options to reduce debt and strengthen the Group's balance sheet. Suggestions that Carillion's business plan has been rejected by stakeholders are incorrect.”
READ: Carillion issues brief, dismissive response to share price leap on chatter it's close to a rescue deal
It continued: “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.”
The firm added: “As part of its engagement with stakeholders, Carillion is in constructive dialogue in relation to additional short term financing while the longer term discussions are continuing.”
Carillion - which issued three profit warnings in less than six months last year and has seen its market value collapse by more than 90% - is a major supplier to the government with contracts across education, the NHS and the rail industry, including HS2.
-- Adds temporary share suspension-