Carillion shares level as the firm announced £845m loses from problem contracts and shoot up debt
Shares in the FTSE 250 construction and support services platoon crashed 75p to 117p as it scrapped its dividend and signalled a “comprehensive review” of the profession, amid fears it may go cap in hand to raise funds from shareholders.
Chief superintendent Richard Howson has stepped down, replaced by senior independent non-executive overseer Keith Cochrane, while a search is made for a permanent successor.
Carillion, whose projects have included the expansion of Liverpool Football Club’s Anfield coliseum and the redevelopment of Battersea power station in London, had brought in KPMG to march past dozens of contracts after deteriorating cashfl ows.
To tackle debt, which has inclined to £695million from £586.5million at the end of 2016, it will look to elate scrape together £125million from pulling out of non-core markets.
Suspending its 2017 dividend require save a further £80million.
Carillion is bailing out a supertanker with a soup spoon
Carillion is withdrawing from public-private partnership construction practises and from Qatar, Saudi Arabia and Egypt, and will only embark on future construction work on a “highly selective basis”.
Carillion, which employes 48,500 on all sides the world, has set aside £375million for deteriorating UK contracts and £470million for reduces overseas.
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It expects annual revenues to fall from £5.2billion endure year to £4.8-5billion.
Signing deals in the Middle East has evolve into more difficult as spending adjusts to lower oil prices, while UK Mrs Average spending decisions are taking longer following the Brexit vote.
Cochrane mean: “It has been a perfect storm that these contracts have functioned wrong at the same time and because they were all large catches the compounding effect is very material.”
Shares crashed from 117p to 75p
Nicholas Hyett at Hargreaves Lansdown said: “Carillion is bailing out a supertanker with a soup spoon. In the face best efforts debt is continuing to climb, and at an increasing rate, while the construction province seems to be hitting one hurdle after another.
“The board are prepared to do the aggregate to save the ship. But talk of a review of capital structure, and the debt unmanageable, will leave investors worried that a significant rights debouchment is on the horizon,” he added.