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Carillion lining up Middle East sales as investors brace for the full scale of its problems

Rhiannon Bury
Carillion sign - REUTERS

Troubled support services company Carillion is expected to hoist the for sale sign over some of its Middle Eastern operations as new boss Keith Cochrane outlines his plan to haul the company back from the brink.

The firm will publish its interim results on Friday having delayed them from last month in order to give it more time to draw together a new strategy. Philip Green, Carillion’s chairman, said in July that the company would be “undertaking a thorough review of the business and the capital structure” ahead of this week’s announcement. 

It has so far reviewed 75pc of its divisions but is expected to release details on the future of the remaining 25pc. A contract in the Middle East contributed to a £845m provision to cover deals which have soured that Carillion ­announced in July. This, along with a profit warning, wiped 70pc off its market capitalisation.

Carillion

Carillion hopes to sell parts of its Middle East operations, along with other divisions of the company not considered part of its core operations, in order to raise cash. It is also drawing up plans for a potential rights issue later this year. Friday’s announcement will also lay bare Carillion’s projected revenues and profits for the rest of the year, as well as its debt position.

Despite the hit to its reputation, the contractor has continued to keep winning contracts. The firm’s construction arm has this week bagged a place on a framework agreement with Sheffield City Council, having been selected alongside rivals Interserve and Balfour Beatty to provide civil engineering projects across the region. Contracts ­include building and maintaining housing, schools and hospitals.

The work, the latest phase of a wider procurement programme from Sheffield City Council called YORcivil2 South and West Contractors Framework Agreement, is worth almost £94m, with Carillion winning a £25.2m slice. 

Interserve too has been hit by its own problems in recent weeks, as its shares fell to record lows after it issued a huge profit warning. Both firms have cited a slowdown in public procurement, particularly from central government, as a factor in their most recent troubles.

Sheffield Council did not comment on whether it was concerned about the companies’ abilities to carry out the work given their recent track record.

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