Carillion collapse has been planned for, admits minister

Oliver Gill
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Carillion is presenting its business plan to lenders today (Source: Getty)

The government today admitted it has prepared for the failure of troubled contractor Carillion after shares have collapsed by more than 90 per cent in a year.

But Cabinet Office parliamentary secretary Oliver Dowden insisted ministers were "working closely" with key suppliers such as Carillion and remained "committed to maintaining a healthy supplier market".

The comments come as Carillion today tries to convince lenders to plug a funding hole of hundreds of millions of pounds.

Late on Saturday, the Wolverhampton-headquartered firm said it would present a business plan to lenders led by Royal Bank of Scotland, Barclays and HSBC this week. The proposals are set to include a pathway to return Carillion to profitability in return for expected concessions.

City analysts have warned what little value is left in Carillion's share price may be wiped away by its bankers taking control.

In response to a question from Labour MP Jon Trickett in the Commons this lunchtime, Dowden said:

We, of course, make contingency plans for all eventualities.

Members will know Carillion is a major supplier to the government with a number of long-term contracts. We are committed to maintaining a healthy supplier market and working closely with our key suppliers.

Read more: Carillion pours cold water on investor hopes

Despite announcing more than £1bn of contract write-downs in the second half of last year, Carillion continued to be awarded huge infrastructure contracts by the government relating to its controversial HS2 plans.

At the end of December, a special report by City A.M. revealed the level of discontentment among rank and file staff at the UK's second largest construction firm.

But Dowden insisted Carillion was continuing to deliver on its ongoing contracts.

He said: "I can tell the house actually that Carillion’s operational performance has continued to be positive. For example, they advanced their work on Crossrail over the Christmas period."

Carillion's share price has yo-yo-ed this week as investors bet a turnaround plan could return value. Shares are up over seven per cent today.

Read more: Revealed: Behind the scenes of Carillion's annus horribilis

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