Carillion wrestles local authorities in multi-million pound UK contract row

Oliver Gill
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Oxfordshire County Council cancelled a £500m contract with Carillion in July (Source: Getty)

Stricken contractor Carillion is fighting to recoup a multi-million pound fee from a recently aborted mammoth local council contract.

Shares were rocked on Friday after the firm admitted it would breach covenants and delivered a fresh profits downgrade. A 48 per cent crash meant the company’s stock market valuation has shrunk to just £92m.

Oxfordshire County Council terminated a £500m strategic asset management contract in July.

One source told City A.M. the council owes Carillion £15m. A separate source said the figure in dispute was nearer single-digit millions.

The council said the £15m figure was “not one we recognise” adding “we are in negotiation on the settlement of final accounts”.

Carillion has written down £1.2bn of contracts since July, the majority of which are understood to relate to the Middle East. It is frantically trying to pull in cash before the first slug of short-term banking facilities need to be paid back in April.

Read more: Exclusive: Carillion locked in £200m Qatar FIFA World Cup contract row


The local government stance contrasts with that in Whitehall.

The Wolverhampton-headquartered firm is one of central government’s biggest contractors. On Friday the Cabinet Office was forced to re-assert it was “supportive” of the firm and that it was in open dialogue on the steps being taken to right-size operations.

Carillion was also forced to re-assure BT’s infrastructure arm Openreach on Friday. The contractor has teamed up with Telent in a £1.5bn upgrade of Britain’s broadband network. Openreach top brass demanded fresh assurances from Carillion that the 60:40 joint venture was not under threat despite the firm’s current travails.

Separately, it was reported Carillion’s pensioners may be forced into taking a stake in the firm in order to rescue it from collapse.

The firm’s pension scheme, which had a £587m deficit in June, may swap some of its liability for shares as part of a wider debt for equity swap to restructure Carillion’s balance sheet, the Sunday Times reported.

Carillion declined to comment.

Read more: BT's Openreach checks £1.5bn Carillion deal

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