UK construction company Carillion is in huge financial difficulties.
The united KINGDOM is the second largest of the construction is also responsible for a huge Â£1.5 billion debt pile and some fear that it could collapse into administration.
The big concern is over the disruption it could cause, taking account of Carillion has as much of government contracts – for the construction of hospitals to the management of the schools.
It employs about 20,000 people in the united KINGDOM and has more personnel abroad.
So, how the company has come in such a distress?
What does Carillion make?
Carillion is specialized in construction, as well as facilities management and ongoing maintenance.
He has worked on major private sector projects such as the Battersea Power station redevelopment, and the Anfield Stadium expansion.
But it is perhaps best known for being one of the largest providers of services to the public sector.
In particular, it is the holder of a contract for the construction of a part of the next HS2 high-speed railway line and is the second largest provider of maintenance services of Railway Network.
It also has 50,000 homes for the Ministry of Defence, which manages nearly 900 schools and manages the highways, and prisons.How big is it?
Very. Carillion employs 43,000 staff worldwide, nearly half of them in the united KINGDOM, where he performs the majority of its business. It also operates in Canada, the Middle East and the Caribbean.
In 2016, it has a turnover of Â£5.2 billion and up to the month of July boasted a market capitalization of nearly 1 billion pounds sterling. But since then, its share price has dropped, and it is now worth Â£61m.What has gone wrong for the company?
Some say it was on himself, too risky contracts which have been cost-effective. It also faced delays of payment in the Middle East that struck his accounts.
Last year, it has issued three profit warnings in five months and has written over Â£ 1 billion of contract value.
This has made it much more difficult to manage its mountainous Â£900m debt pile and Â£600m pension deficit.
In December, the firm convinced the lenders to give it more time to repay.
However, the banks, which include Santander UK, HSBC and Barclays, are understood to be reluctant to lend more and more money.Why does it matter if it collapses?
As Carillion is a leading supplier to the public sector, some fear its collapse would cause a lot of disruption.
Labour MP Jon Trickett has informed the parliament that if it went under, at the risk of “considerable damage” to a range of public services.
Thousands of jobs are at stake. The unions have said workers don’t deserve to be caught between two fires and have called on the government to safeguard their jobs and bring Carillion contracts back to the house.
The government has declared that “contingency plans are in place”, and it is monitoring the situation closely.
The big question is, which are going to seek the company to loss of public markets if he went under another outsourced service provider, or the government itself?
Or would the government, which said Carillion continues to do good work on projects such as Crossrail – to be ready to provide emergency financial support until it gets its house in order?
Analysts say that the Carillion has a large order book the company line, but will be unable to deliver, at less than its cash flow problems are solved.