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Trouble at t'mill? Carillion issues?


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Spotted this  and wondered if it might cause a few problems withing the rail community?  The Defence community certainly seem worried.

 

https://uk.reuters.com/article/uk-carillion/uks-carillion-to-discuss-rescue-with-creditors-on-january-10-idUKKBN1EV0IK

Potentially, Carillion undertake the infrastructure maintenance on the East London Line for TfL, so could have a significant impact on this heavily used commuter line.

 

Regards, Ian.

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There have been suggestions that Carillion have been in trouble for some time now. 

 

Not just a suggestion. The article quotes the first profit warning as being last July.

That ties in with when I first read about the problems.

Bernard

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Not just a suggestion. The article quotes the first profit warning as being last July.

That ties in with when I first read about the problems.

Bernard

 

It was mentioned in the HS2 thread about that sort of time. 

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They have already stopped payments to their pension fund,

Tell me about it, one of my Pensions is sitting with them, having had 13 years working for a Company they took over, I hope for my sake it gets sorted! Quite a few of my old colleagues are still there and pretty depressed, the atmosphere is not good.

 

Peter

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As regard HS2, the Government are on record as saying they specifically drew up the contracts such that (1) There would be no need to bail Carillion out and (2) I Carillion did fold then the others in the consortium (nobody won a contract outright) would be legally and financially liable to finish the work / pick up any extra costs inured.

 

However as we have seen with a number of companies recently, where it is felt that the Pension scheme is threatening a companies ability to rise cash and continue trading, what can be done is to transfer the pensions to the state backed Pension Protection Fund. This is seen as 'Good news' by the financial markets and will result in a rise in the share price and an improvement in the availability of capital to fund restructuring. I am not sure the current situation with Carillion, but it would not surprise me if this is why the shares jumped recently.

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Tell me about it, one of my Pensions is sitting with them, having had 13 years working for a Company they took over, I hope for my sake it gets sorted! Quite a few of my old colleagues are still there and pretty depressed, the atmosphere is not good.

Peter

I have 23 years worth of pension in TPS (an engineering design consultancy owned by Carillion). I left to go freelance seven years ago so I am somewhat interested in the Company’s survival.

 

Darius

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I am finding it difficult to get any figures re the situation.

It does seem that a major problem is with NHS work.

Involving SERCO is not my idea of a solution going on my past experience.

I don't see outside money coming in at the required rate so it would seem to be  an X shares for 1 scenario or it all goes to pices.I would like to see what the costs are on the HS2 part as if they are not doing as well as intended on that job that could indicate a very expensive outcome.

Monday might produce some news.

Regarding pensions. At least there is now the PPF and FAS to provide a reasonable amount of help. When I lost everything three weeks before I was due to retire in 2003 there was nothing to fall back on. Four years of campaigning eventually got a result. There is a loss, however, let's put it this way, I don't need to worry about being able to afford a Bachmann crane. If you are worried, there is a safety net in place, not perfect but a big relief to have a scheme in place.

Bernard

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It is hard to watch a British company of that size (and pretty good quality on delivery, if my experience of working with them on several major rail projects is any guide) be thrown to the wolves. We could just wash our hands of the affair, and let the Chinese, who have been angling for them for a number of years, buy their way in, on the cheap, and reap the inevitable whirlwind (cf Tata). Or we could do what many European countries have done with their equivalents, and ensure proper re-structuring of both the company and its debt, is enabled, by the positive encouragement of mergers and stand-alone, special interest (and essentially profitable) companies. Witness Siemens, Alstom, CAF and others recently.

 

The current problem is Brexit (aside from the questionable decisions made by the company internally). What Euro firm will want to conjoin with a firm that could see 50% of its activity constrained or curtailed by so uncertain a future relationship?

 

The clamour in some quarters to bring their activities "in house" is understandable, particularly in health and social care. But I am not sure where that would lead, given current spending and borrowing limits, only marginally raised recently, underscored by Spreadsheet Phil.

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Construction is a very hard industry to make money in. Very low margins for quite high risk. Compare 1to2% profit for taking risks with ground conditions, underground utilities and the British Weather. Compare that to TOCs that get at least 3% margin where the biggest risk is the economy and unions.

 

Cash flow is also a killer with long delays common and if you have a loss making contract then you quickly run out of cash and have to inject money from group reserves.

 

All of the biggest UK construction companies have had a bad few years but not to the extent facing Carillion and the others are well on the way to recover.

 

I’ve not worked for Carillion myself but have a pension with Balfour Beatty who are now back in an upwards path. I also have 10years if pension locked into PPF after the construction company I started my career with went bust.

 

I think the problems with bailing out Carillion are the precedent it sets in an industry where company failures are very very common and there are so many other companies able & willing to fill the void that would be left if Carillion fail.

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