May warns against complacency over Carillion's collapse - spokesman

Cornelia Mascio
Gennaio 17, 2018

Jon Trickett MP, Labour's Shadow Cabinet Office Minister, said: "Alarm bells have been ringing for over six months about the state of Carillion's finances, so the Government must come forward and answer questions on exactly what due diligence measures were undertaken, before awarding contracts to Carillion worth billions of taxpayers' money".

Shares in Carillion, listed on the London Stock Exchange were suspended today at a price of 0.142 pence each.

Talks were held throughout the weekend between Government ministers and company officials in a bid to keep Carillion in business, but they broke up on Sunday evening without a deal.

The firm provided meals and cleaning services to nearly 900 schools; delivered maintenance and facility management services to hospitals with nearly 12,000 beds, catering for 19,000 meals a day; built road, rail and hospital projects; maintained 50,000 homes on military bases; and was building prisons and other major construction projects worth hundreds of millions of dollars.

Bastien says Carillion's Canadian assets, which include equity positions in several hospitals - including the Centre for Addiction and Mental Health in Toronto - would be attractive for a number of large potential buyers in Canada.

Carillion - a major supplier of services to the United Kingdom government - was founded in 1999 and has since acquired a number of other companies, meaning that it is the ultimate sponsor for as many as 14 separate defined benefit pension schemes.

More than half the borrowing is owed to banks led by a £835 million-loan from lenders including Barclays Plc, Lloyds Banking Group Plc and Royal Bank of Scotland Group Plc, according to a September company statement and data compiled by Bloomberg. For example, in 2016 it won a seven-year contract with Nationwide to manage its estate buildings in line with the bank's sustainability strategy, which promises to optimise energy use, cut water use by five per cent and deliver an 80 per cent recycling rate by 2020. "Any evidence of misconduct will be taken very seriously".

This will likely mean 28,500 members from Carillion's 13 United Kingdom schemes, which have a combined IAS 19 accounting deficit of £587m as of the end of H1 2017, will be transferred to the Pension Protection Fund (PPF). Kier said there were contingency plans in place and they were not expecting an adverse financial impact from the collapse of Carillion.

Carillion retirees already receiving their pensions will continue to receive payments, the Government has assured.

"We want to reassure members of Carillion's defined benefit pension schemes that their benefits continue to be protected by the PPF and will continue to be protected if or when their scheme enters the PPF assessment period".

May's government also faced questions from the opposition Labour Party about why it awarded the company 1.3 billion pounds of state contracts after Carillion fell into financial difficulty in July previous year.

"The administration will be conducted in an orderly fashion", he said.

"There is some good news in this awful tale, in that the PPF now has a surplus of around £6bn so it can easily take on Carillion's pension liabilities at the current time".

Leaders of the Trades Union Congress, Unite and GMB met Business Secretary Greg Clark on Tuesday evening and warned him that workers should not be left to "carry the can".

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