British construction and outsourcing services group Carillion announced its immediate liquidation Monday after the heavily-indebted company failed to secure a financial rescue from the UK government and banks.
Carillion, which employs 43,000 staff worldwide including 19,500 in Britain, said that the government would nevertheless provide some funding to allow current state projects to continue, following crunch talks over the weekend.
“This is a very sad day for Carillion, for our colleagues, suppliers and customers that we have been proud to serve over many years,” company chairman Philip Green said in a statement.
“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.”
Carillion is a major UK government contractor involved in everything from schools to the multi-billion-pound High Speed Two (HS2) rail project.
But it has been struggling for some time and in July last year issued the first of several profit warnings.
Carillion on Monday said “it had no choice but to take steps to enter into compulsory liquidation with immediate effect”.
It added: “An application was made to the High Court for a compulsory liquidation of Carillion before opening of business today and an order has been granted to appoint the Official Receiver as the liquidator of Carillion.”
Despite the red flags, the government continued to award the company major public contracts, including on the flagship HS2 project, leading to criticism.
Andrew Adonis, who resigned as head of a government-backed infrastructure commission last month, said Sunday that the Carillion crisis raised ‘big questions’ for transport minister Chris Grayling.
Meanwhile Vince Cable, the leader of the Liberal Democrat party, called on the government not to bail out the group.
“Can’t have privatisation of profit and nationalisation of losses,” he tweeted.
Carillion has a wide range of public sector contracts, including providing support services for almost 900 schools and around 50,000 homes for military personnel.
The company, with operations also in Canada and the Middle East, had revenues of £5.2 billion ($7.1 billion, 5.9 billion euros) last year.
In January, British watchdog the Financial Conduct Authority launched an investigation into its market updates.
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