UK Construction Giant With 43,000 Employees Collapses

Tense last-minute rescue negotiations failed to yield a result over the weekend, and on Monday morning a major British construction company announced it was going into liquidation after it was unsuccessful in securing a financial lifeline. Carillion, which employs 43,000 people around the world, said in a statement Monday that rescue talks with stakeholders including the British government had collapsed, sending the company into compulsory liquidation.

Commenting on the collapse, Carillion Chairman Philip Green said in a statement that "This is a very sad day for Carillion…Over recent months huge efforts have been made to restructure Carillion to deliver its sustainable future."

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.

Carillion, which has numerous public sector and employs 19,500 workers in Britain and 10,000 in Canada, has its roots in the construction business: roughly three-quarters of its sales come from the U.K., where it has hundreds of contracts with the government. It also builds infrastructure for high speed rail and power distribution projects, and provides government services such as road maintenance and hospital management.

The company had no choice but to liquidate after holding meetings with government figures over the weekend after its bankers refused to provide £300m in new funding without direct intervention from Whitehall. That said, the government will be providing funding required by the liquidator — known as the official receiver — to maintain the public services carried on by Carillion staff, subcontractors and suppliers. According to the FT, PwC is expected to be appointed by the courts to act on behalf of the official receiver and handle the liquidation of Carillion’s assets.

Carillion's global sales hit £5.2 billion ($7.2 billion) in 2016; the catalyst for its collapse is that Carillion was saddled with net debts of roughly £900m and a pension deficit of £587m, which hugely outweighed its stock market valuation last week of less than £100m after the company lost around 90% of its market cap during 2017

The crisis was sparked last year when the Wolverhampton-based company warned it was losing cash on key contracts, debt was rising and that it would have to write off £800m and suspend its dividend, leading to the departure of former chief executive Richard Howson.

As a result, Carillion shares, which had been worth as much as £4.57 ($6.30) in late 2007, slumped to trade as low as £0.12 ($0.17) last week after a series of warnings about its finances.

 

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The collapse of Carillion was presaged last year, when the company alerted investors that it was short of cash and would sell assets to raise money.

David Lidington, the top minister at the U.K. government's Cabinet Office, said in a written statement that his priority was to keep essential public services running.

"All [Carillion] employees should keep coming to work, you will continue to get paid," he said. "Staff that are engaged on public sector contracts still have important work to do."

Lidington told the BBC on Monday that the government has been working on contingency plans since 2017 in preparation for a potential collapse. He added that new government contracts awarded to Carillion were structured as joint ventures to ensure that that other partners would be able to step in to complete the necessary work. But critics are unhappy that the government kept awarding contracts as the company floundered.

"It has been more than surprising, possibly even negligent, that the U.K. government continued to dish out contracts to Carillion even though their future has looked uncertain for some time," said Fiona Cincotta, a senior market analyst at City Index. "[This] is a costly mistake that the U.K. government can ill afford."

Angela Rayner, shadow education secretary, said the collapse was another example of the failure of privatisation of public services. “Carillion employees whose jobs and pensions are at stake should be the main concern, they are blameless in this corporate meltdown,” she said.

Speaking of pensions, around 28,000 members of Carillion’s 13 UK pension schemes will now be transferred to the Pension Protection Fund, the industry lifeboat for collapsed companies and the UK equivalent of the US PBGC  — one of the largest schemes the PPF has had to take over. Those who are not yet retired will receive 90 per cent of the pension they were expecting, up to a cap, while members who are already receiving their pensions will get the full amount, but may see lower annual increases in future.

Comments

Occident Mortal Bes Mon, 01/15/2018 - 09:23 Permalink

US and UK have very similar cultures and economies.

 

One big difference is that the US chooses to spend 20% of the federal budget on defence whereas in the UK this same slice of the pie is spent on national healthcare.

 

In the US, military personnel are revered. In the UK members of the NHS are revered.

In reply to by Bes

css1971 SuzerainGreyMole Mon, 01/15/2018 - 17:35 Permalink

Queues, and death panels.

 

The sad fact of life is that when resources are scarce, they are ALWAYS rationed. I'll say that again for emphasis. ALWAYS. So, you don't get to have free stuff for everyone, because it doesn't exist.

 

Your only choice is how you ration them.

 

Well, the NHS doesn't ration using money, so instead it rations care, services using death panels and queues.

 

In reply to by SuzerainGreyMole

zippedydoodah jcaz Mon, 01/15/2018 - 12:05 Permalink

Another yank who knows fuck all.

My wife was admitted to hospital on 22nd December 2017 with suspected angina, diagnosed by our GP (Doctor). She was soon in hospital, taken by ambulance in less than half an hour. She was diagnosed as having had a heart attack. Despite this happening over the Christmas period, she was given a triple heart bypass, just seven days later, on the 29th December. She was well enough to be sent home on Jan 1st 2018.

We don't have to pay any insurance for this world class National Health Service. We didn't have to pay a single penny for her medication when she was discharged. We will have to pay £104 for the next year for all medication that she will need for the next 12 months. All this at the busiest ever December for the NHS.

We have not been pushed into bankruptcy and we can focus on her 100% recovery with our savings 100% intact.

So fuck you, ignorant fucking wanker with your head up your american shithole. 

In reply to by jcaz

SuzerainGreyMole zippedydoodah Mon, 01/15/2018 - 12:34 Permalink

As a Brit living in California with no health insurance, I was delighted to have read your comment because I also still believe that the NHS is one of the last great things that everyone living in the UK should be glad about. Because while the health system here in the USA is designed for the benefit of esurient turds; Destroying the NHS is something that those globalist corporate arseholes will have a really hard time trying to do.  I pray their destruction will come soon so that the US and the whole world can have a health system for the benefit of all its people.

Best wishes for your wife in 2018.

In reply to by zippedydoodah

jeff montanye NoPension Tue, 01/16/2018 - 07:57 Permalink

fartballs. much of the reason that the single payer health care systems world wide cost half what the u.s. spends (http://www.visualcapitalist.com/u-s-healthcare-system-global-outlier-no…) is that the healthcare system bargains with the providers for lower costs so the profits to the drug companies, hospitals, doctors, etc. are less and the wonderful world of private healthcare insurance is bypassed completely (not that they don't help in the morass that is u.s. healthcare).

and, seriously, a reconsideration of suicide is long, long overdue, both for saving money and improving personal freedom.

In reply to by NoPension

jeff montanye Kprime Tue, 01/16/2018 - 08:13 Permalink

wildly exaggerated. no more than half a dozen countries really qualify as genocide as such. and the expenses are only about $900 billion (https://www.usgovernmentspending.com/defense_spending).

of course if you consider what we get for the expense (some terror attacks, less trade and investment, reduced tourist pleasure due to international hatred, greater psychic and physical pain born by service members) perhaps an argument could be made for a higher figure. a much higher figure.

In reply to by Kprime

css1971 zippedydoodah Mon, 01/15/2018 - 18:02 Permalink

"We don't have to pay any insurance for this world class National Health Service."

The NHS budget is 130 billion pounds per year. Where do you think it comes from?

There are around 30 million taxpayers in the UK, so that works our around 4,300 pounds each per year on average. Of course, taxes and National Insurance payments aren't distributed equally, but are distributed to higher earners.

So, people do pay insurance for the NHS, and pay quite a lot. If you didn't pay, you're just expecting someone else to pay for your usage.

In reply to by zippedydoodah

Curiously_Crazy css1971 Mon, 01/15/2018 - 19:33 Permalink

But it's a flat tax.

I can't speak for the UK but I'm guessing it's similar. In Australia there is a flat 1-1.5% tax on everyones income whether $20,000 or $200,000. This means everyone has access rich or poor.

The waiting lists are a myth (on the whole) perpetuated by those who look private health insurers as the be all and end all. I needed an xray a few months ago, waiting time was 2 hours - I literally left the Dr's office went and had some lunch, walked around for a bit and then to get them done. My ol man in his 70's needed an MRI, waiting time 2 days. Low income earners get any prescription for a max of $5.60 a month.

The other myth is it's 'all government'. No - we can get private health insurance to, and at far better prices than those in the US pay even before obummer care. For around $700 a year for a single you get a private hospital, room to yourself and can choose your surgeon.

Ex-pats from the US are astounded at the shit they've been fed once they see how it really works. Think about it for a second - you've got fascist forced private health insurance, if everyone is forced into private without a choice unless they pay a huge sum exceeding the cost of full private health insurance in other countries what do you think will happen to prices? exactly what *is* happening to prices in the US right now.

In reply to by css1971

Free_Market_Mafia zippedydoodah Mon, 01/15/2018 - 19:22 Permalink

I am glade to hear your wife is recovering! 

 

It is easy to look at that this incident and say it does not cost you a dime of out of pocket expense! But when you step back and add the cost of all the taxes you payed and look at the fact medicine is under full government control - you have no competition to drive down costs and no incentive for increasing the quality of service. 

 

Health care and education keep getting more expensive with every passing day - the quality goes down while the costs go up. Now compare this with any Private Sector Good and or Service and tell me why their costs trend down ward while government controlled services do the exact opposite. 

 

You are neglecting the unseen and are not looking at the true cost! Nothing is free and competition spurns competitiveness, ingenuity and  innovation.

 

God bless you and your wife and may she have a full recovery! May your grandchildren have the same access to free health care - I doubt it, but  we can pray that the fundamentals of economics don't hold true and blind ideology keeps on giving us free healthcare.

In reply to by zippedydoodah

Mr. Apotheosis zippedydoodah Mon, 01/15/2018 - 20:59 Permalink

I signed in to up-vote your comment sir. The American "healthcare" system is the biggest fleecing scam invented by mankind. It is literally based on how much the user is ABEL to pay and if that means your life savings, so be it. It's astonishing watching the lemmings defend it against top-quality universal care. Sooner or later, those suckers are going to get fleeced too. What's even MORE astonishing is that people aren't more pissed off about it.  

In reply to by zippedydoodah

PT Endgame Napoleon Mon, 01/15/2018 - 10:23 Permalink

I think the reason the US pays for the defence is because the US dictates what happens with that "defence".

"You're not allowed to have weapons.  ONLY WE can have weapons.  And in return for you being defenceless, we will protect you with our weapons but we also get to dictate the fights."

And that would explain the US getting the "World's Policeman" tag.  Another case where I know nothing.  This is only my opinion so anyone out there smarter than me is welcome to explain if and how I am wrong.

In reply to by Endgame Napoleon

Setarcos Endgame Napoleon Mon, 01/15/2018 - 10:49 Permalink

I've got a novel idea for you and all US admins, past and present.  Stop the occupation of Europe and about 130 countries world wide all told, stop starting wars - at least 50 since WW2 - stop funding terrorists such as Al Qaida and ISIS, stop interfering in the affairs of other countries generally and fix internal problems with the trillions of dollars saved.  Aside from client local rulers in various countries who get rich off US subsidies, no one wants you lot in our countries.  Yankee go home and save a fortune, or else stop whining, because being "exceptional" and "the greatest" has a cost.  Believe it or not, you are not a victim - though a certain other privileged "tribe" also has that mentality - your effing Empire has created millions of real victims around the world, so eff off.

Caveat: yeah I know that you personally have zero influence (just like the rest of us plebs), I'm just rather bluntly pointing out why your rulers Empire costs US tax payers a lot of money.

In reply to by Endgame Napoleon

SokPOTUS Setarcos Mon, 01/15/2018 - 20:09 Permalink

Right.  Be careful what you wish for.  

 

As I recall, the US saved Europe's hide twice last century.  Somewhere deep in the DNA on the Continent lurks the same demons that set the world on fire twice in a generation.

 

You got us on the Al Queda and ISIS bs tho.  We scrood the pooch there.  Maybe we've stopped for the next three years anyway.  That was the first swamp Trump drained.  Let's hope for all our sakes, US and Europe, he drains the D.C. swamp next. 

In reply to by Setarcos

Setarcos SokPOTUS Tue, 01/16/2018 - 02:19 Permalink

FYI Germany is in Europe and the US did not save Germany's hide, nor any of its allies, during WWs 1 nor 2. Also fyi the US didn't enter WW1 until it was nearly over, but US troops certainly helped the British and French to finish it.  Please try learning some history and geography.  In brief: in 1918 the US helped save the hides of Britain and France, not Europe as a whole.

As for WW2, again the US was late to enter and certainly did not "save Europe" from Nazi Germany, the Soviet Union did. By the time of the Normandy Landings Russia had destroyed most of the German military.  Had that not happened the Landings would have been impossible ... but in any case the US did not "save Europe", Germany and its allies were still just as much in Europe as during WW1.  Europe is not a country, any more than Africa or Asia.

In reply to by SokPOTUS

SuzerainGreyMole Endgame Napoleon Mon, 01/15/2018 - 12:49 Permalink

The military security complex deep state in the US want their trillion dollar budget and nobody, it seems, can do fuck all about it. If the US actually spent all its money on job creation; RD; schools; hospitals; putting the military to work also to do it; closing all overseas bases; getting rid of ushery; getting rid of the fed; infrastructure improvements and so on, the US would be one of the richest countries in the world with NO DEBT and 100 per cent employment. One can only dream for poor Hennny and Sam. I will always do until the morons in power are got rid off!

In reply to by Endgame Napoleon

shrimpythai SuzerainGreyMole Wed, 01/17/2018 - 07:27 Permalink

still waiting for the Holy Ghost to intervene along the line somewhere  5 5 5 damn maybe the HG is waiting for us humans to get smarter - after all your soul is recyclable - come back and try again if at first you don't suceed  eh? maybe a few or 80 lifetimes gets you there - not sure - just try to get your soul past teh gatekeepers when you do die if you can - so  you don;t have to relive this planet too many times  according to Thoth  - and maybe no intervention from higher races if this planet is quarantined to some respect - let the nukes roll as souls will still live on eh? no big deal if dead - you move onwards and upwards anyway 

In reply to by SuzerainGreyMole

Twee Surgeon Endgame Napoleon Mon, 01/15/2018 - 13:44 Permalink

Er' the French required the US military to depart decades ago, (72?) the Germans have numerous coalition bases on their territory because they keep invading people. The Brit's have several US Airforce bases that have been around since WWII and they never left but no one is begging them to stay and protect us, but they are good to have around. Nobody will be laying awake at night in fear if they chose to roll up and take their assets Stateside. The Brits have enough nukes and know how to make any would be invader think twice, nay, thrice, about invading those tiny Islands. No one has done that successfully since 1066 AD, except for the Jigaboo's, but they have promised to behave, so it's OK.

In reply to by Endgame Napoleon