Carillion denies rescue plan in tatters

Carillion tonight denied reports that its creditors have rejected a proposed rescue plan.

The firm put out a statement this evening after the Stock Exchange closed for trading to say that crunch talks with financiers were still ongoing.

It said: “Suggestions that Carillion’s business plan has been rejected by stakeholders are incorrect. 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 met with lenders, including HSBC and Santander, on Wednesday about a possible rescue package.

But Carillion had not put out a statement to say how the talks had gone leading to speculation that a number of problems had been thrown up.

Earlier today, reports suggested the country’s second biggest builder had lined up accountancy firm EY as an administrator if crunch talks about a rescue plan collapse. At one stage, shares by over a third.

But in its statement this evening, the firm said: “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.”

The government, the Pensions Regulator and representatives from the firm held crunch talks to discuss the firm’s options on Friday.

Cenkos analyst Kevin Cammack told Building: “A crucial stage has been reached…I’m sure much brinksmanship will be on display over the next few days.”

Carillion has lost 90% of its share value since July last year when it first announced a massive £845m writedown and huge debts leading to the departure of then chief executive Richard Howson. New boss Andrew Davies is set to join in just over a week’s time having been fastracked into the role – he is arriving 10 weeks early – following his decision to leave Wates last November.