The future of troubled engineering firm Carillion is being discussed at high-level government meetings this weekend, the BBC understands.

The firm is a key government contractor for projects including the HS2 high speed rail scheme, schools and prisons.

There are fears it is close to collapse as it struggles with £1.5bn of debt and a pension shortfall of £587m.

On Friday, Carillion said it remained in constructive dialogue about short-term financing.

Reports that creditors had turned down a potential rescue plan sent the firm’s shares down by more than 28% on Friday.

Administrator firms PwC and EY were also reported to have been put on standby as talks about the firm’s future carry on.

In a statement, Carillion said: “Suggestions that Carillion’s business plan has been rejected by stakeholders are incorrect.”

It said the firm remained in constructive dialogue about short term financing while “longer term discussions are continuing”.

The government has said it was “monitoring the situation closely”.

A government spokeswoman said: “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 work closely with our key suppliers.”

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