As British construction giant Carillion goes in to liquidation Graham Spooner, explains what it means for investors.
British Construction giant goes in to liquidation
- Carillion failed to reach agreement with lenders and government to save it
- News will raise concerns over quoted companies and their role in providing public services and PFI contracts
- Group joins the likes of Balfour Beatty, Serco, Capita who have run into difficulty in last 10 years and a new focus is expected on how they operate
The ongoing problems involving British Support Service and Construction groups reached another low today with Carillion failing to find a rescue package and falling into liquidation.
This news will again raise concerns over quoted companies and their role in providing public services and PFI contracts.
The group’s trouble started when it lost large amounts of money on big contracts. It’s therefore natural to expect that management will, amongst other things, be criticised for taking on too many contracts that turned out to be far riskier than they thought, both in the Middle East and the UK.
The disappointment of not reaching an agreement means the government will have to provide funding to maintain the public services run by Carillion. The implications, with so much government involvement, will no doubt rumble on as opposition parties who have long raised concerns over the sector have their say. As a result of contracts with schools, prisons, hospitals, along with the high profile HS2 project and a considerable number of smaller companies, the impact could be far reaching.
Could this be seemed as a low point for the sector and viewed in time as a turning point? Well, with so many companies running into difficulty over the last 10 years, Balfour Beatty, Serco and Capita to name three, there will be a renewed focus on how these companies operate. Building new and maintaining existing infrastructure affects everybody and is hugely important and it is of my view that the British public deserve better.
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