Yahoo Finance Carillion job losses rise above 1,000
The number of Carillion workers who have lost their jobs as a result of the collapse of the construction firm has topped 1,000.
A further 152 former employees are being made redundant this week, taking the total to 1,141 since the company went into liquidation last month.
The official receiver announced that 7,610 jobs have been saved, of about 19,500 employed by the company in the UK, including 942 following agreements over the past week to buy contracts held by Carillion.
A statement by the official receiver said: “Most employees who have transferred so far have done so on existing or similar terms.
“Those who have lost their jobs will be able to find support through Jobcentre Plus’ rapid response service and are also entitled to make a claim for statutory redundancy payments.
“Discussions with potential purchasers continue and I expect that the number of jobs safeguarded through the liquidation will continue to rise.
How did the company get into trouble?
Companies like Carillion have to keep projects on budget and keep winning new contracts. When one of those fail, problems loom.
Carilllion shocked the market in July with a massive profit warning, writing down its value by £845m, all related to key contracts. Two more profit warnings followed and the company admitted it needed cash quickly not to breach bank loan terms
At the start of 2017 shares were changing hands at 240p. This weekend they were 14p.
With debts of £900m it has been trying to arrange a £300m cash injection. However, lenders will not provide the cash without government guarantees.
What happens to the pension scheme?
Carillion has a £580m pension scheme deficit. If it collapses the government-backed Pension Protection Fund would take over the scheme, although the liability would swell, to £800m. While the Fund provides a safety net for millions of workers, there are limits on what it can pay out.
Who runs Carillion?
Chief executive Richard Howson quit after the July profit warning, with the new boss yet to start. It has been run by engineering industry veteran Keith Cochrane and the group’s chairman Philip Green, the former boss of United Utilities. Sally Morgan, who was director of government relations for Prime Minister Tony Blair, is also a director.
“I am continuing to engage with staff, elected employee representatives and unions to keep them informed as these arrangements are confirmed.”
It also emerged on Monday that a major investment firm that owned 10% of Carillion considered suing the the collapsed government contractor over suspicions that directors knew it was in difficulty earlier than they admitted in public.
Kiltearn Partners says it “considered participation in civil legal action against Carillion with a view to recovering a proportion of its clients’ crystallised losses” following its profits warning last summer.
Kiltearn is one of a group of former shareholders who have submitted evidence to the parliamentary committees investigating Carillion’s failure. This evidence was released on Monday, as MPs prepare to question the company’s auditor KPMG at a hearing on Thursday.
Two investment institutions said they believed managers had been underplaying the deterioration in Carillion’s finances before it announced an £845m writedown of key contracts and issued a profit warning in July last year.
Edinburgh-based Kiltearn said it was monitoring an investigation by the accounting watchdog, the Financial Reporting Council, to see if KPMG, which took £20m in fees from Carillion over 10 years, breached “ethical and technical standards”.
