Government in crisis talks over company that provides vital services to schools

Government in crisis talks over company that provides vital services to schools

Administration would put at risk the jobs "at least some" of the 19,500 people employed by the firm, Sky News said.

According to the Press Association, Carillion's lenders - which include Barclays, HSBC and Santander - rejected the plan because it did not present enough of a restructuring plan for the business.

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

Any agreement was likely to involve the raising of new capital and the conversion of existing debt to equity, which would result in "significant dilution to existing shareholders", it said in a statement.

Carillion is holding crisis talks with United Kingdom government representatives on Friday, which Sky News said were aimed at safeguarding the more than 28,000 pension scheme members who face potential cuts to retirement payments should Carillion fail.

As well as employing 19,500 people in the United Kingdom, it is one of the government's biggest contractors.

But it is perhaps best known for being one the largest suppliers of services to the public sector.

It also supports schools with health and safety and grounds maintenance.

"As Carillion is a major supplier to government, it should come as no surprise that we are carefully monitoring the situation while working to ensure our contingency plans are robust".

United Kingdom shadow business secretary Rebecca Long-Bailey said: "The collapse of Carillion could provoke a serious crisis".

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Employing 19,500 people in the United Kingdom and 43,000 in total around the world, Carillion will today meet the UK's Pension Regulator and the pension rescue body, the Pension Protection Fund, because included in Carillion's liabilities is a pension shortfall of £587m.

The assistant general secretary of the Unite union, Gail Cartmail, said: "The government must consider all options while the future of Carillion hangs in the balance, including bringing contracts back in-house".

The developer tabled a business restructure plan on Wednesday but it is understood it failed to convince its lenders it was a strong enough proposition.

The reported that David Lidington, who was moved to the Cabinet Office as part of Prime Minister Theresa May's reshuffle this week, convened the meeting with Business Secretary Greg Clark, new Justice Minister Rory Stewart, new Transport Minister Jo Johnson and Liz Truss, Chief Secretary to the Treasury.

The person familiar with the situation, who asked not to be named due to the sensitivity of the situation, said the government needed to get involved to help prop up the supplier.

"We are committed to maintaining a healthy supplier market and work closely with our key suppliers".

Adding to the pressure on the small cap firm - which issued three profit warnings in less than six months a year ago and has seen its market value collapse by 90% - was a recommendation from broker Peel Hunt to sell the stock ahead of forthcoming newsflow.

By 4.00pm, Carillion shares were down 29.4%, or 5.88p to 14.11p, having hit a low of 12.5p after the reports emerged, after being more modestly lower this morning.

A government spokesperson said: "We can confirm that a ministerial meeting took place yesterday, 11 January".

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