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Carillion lenders prepare £800m debt deal

A pack of UK banks have drafted in advisers to steer them through a financial restructuring at Carillion, the troubled support services group.

Sky News has learnt that lenders including Barclays, HSBC and Royal Bank of Scotland have appointed FTI Consulting ahead of a crucial set of results that Carillion is due to announce next week.

FTI is said to have been hired in the last few days by the banks, which have lent hundreds of millions of pounds to Carillion.

The future of the construction company, which has a key role in major public infrastructure projects such as the HS2 high-speed rail link, was plunged into doubt by a huge profit warning in July.

The alert, which Carillion blamed partly on big writedowns on a number of projects, sent its shares crashing.

Since then, it has ousted its chief executive, finance director and other top managers, bringing in a slew of City advisers to plot its recovery.

The recruitment of FTI by Carillion’s biggest lenders comes amid speculation by City analysts that the company will be forced to launch a massively discounted rights issue to raise enough capital to secure its future.

It is also selling a number of divisions in the Middle East, Canada and the UK healthcare sector to raise several hundred million pounds to help shore up its balance sheet.

A debt-for-equity swap is also a possibility, while the company’s sizeable pension liabilities will require some form of restructuring.

Carillion is one of the UK’s most important infrastructure delivery companies, with a major presence in maintaining roads, rail services and military bases.

The company has hired EY, the professional services firm, to accelerate its cost reduction and cash collection.

While it now has a market value of just £188.24m, the company effectively carries a huge multiple of that sum in debt and other liabilities.

Carillion has annual revenues in excess of £5bn, and employs approximately 43,000 people.

The company declined to comment on Friday.

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