Shares in stricken contractor Carillion plummeted over 50 per cent this morning after it downgraded profits, warned debts have spiralled, and admitted it will breach its banking covenants.
Profits will be "materially lower" due to a combination of "slippage" in the start date of a key Middle East project and a failure to improve profit margins in its support services business.
Carillion also warned of "delays" to a critical £300m programme of selling non-core assets.
Full-year average net debt is set to spiral to between £875m and £925m.
After it insisted at the end of September it will comply with its banking terms, today the company conceded it will breach its covenants by contravening with its earnings to net debt target ratio.
Interim chief executive Keith Cochrane said:
While we continue to target cash collections, reduce costs, execute disposals and focus on delivering for our customers, it is clear that significant challenges remain and more needs to be done to reduce net debt and rebuild the balance sheet.
In July, Carillion shocked the markets and its 50,000-strong workforce by admitting to a raft of problems. At the heart of its woes were huge write-downs to contracts, which, once a full review had been completed, topped £1.2bn.
Since that date, it has rolled out a series of "self-help" measures, including reducing costs, collecting cash and embarking on a £300m disposal programme.
Today, Carillion said such measures had not been enough to allow it to operate within its banking covenants. Meanwhile, the firm warned it "of delays to certain PPP disposals".
Cochrane thanked Carillion's lenders for their ongoing support and was looking forward to handing over to his permanent replacement.
He said: "I remain focused on addressing this issue before my successor, Andrew Davies, takes up the role on 2 April 2018."