Contractors report ‘steady stream’ of Carillion workers’ CVs as fears grow that pension deficit will deter investors
Rival contractors are sifting through CVs from Carillion staff amid growing worries that the size of the firm’s pension deficit will put off investors pumping money into the company.
Carillion, which employs close to 50,000 people, shocked the industry last month when it said a series of contracts had blown a hole in its accounts, forcing it to announce an £845m writedown.
The scale of the problems led to the departure of chief executive Richard Howson after more than five years in the post and the appointment of an interim, Keith Cochrane, to steady the ship.
But rival contractors are reporting that they are seeing a steady stream of CVs from staff ready to leave.
One plc chief executive, who asked not to be named, said: “The CVs of people from Carillion are all over the place.” Another senior executive at a rival added: “At the level below the top leadership, we’ve been flooded with CVs.”
Carillion, which has hired accountant EY to carry out a strategic review of the business with the results set to be announced at its interim results next month, declined to comment on whether it was concerned about reports of staff potentially leaving.
But announcing EY’s appointment last month Cochrane said: “EY will provide support across the business and bring an external perspective to our cost reduction and cash collection challenge.”
Analysts are also worried about the size of the firm’s pension deficit, which currently stands at close to £600m, with the figure potentially hobbling Carillion’s hopes of bringing in investment.
The firm is already paying £50m a year to the pension deficit fund, which is subject to a review, although the chairman of the pension fund trustees, Robin
Ellison, declined to comment when asked whether the fund would seek a share of any equity raised by Carillion.
But Stephen Rawlinson, analyst at Applied Value, said: “Unless the pension trustees make clear their position, investors will not invest just to see their new money be absorbed by the pension.”
Cenkos analyst Kevin Cammack, who has said Carillion needs between £400m and £600m to prop up the balance sheet, added it was “virtually impossible” to put a value on the company until the balance sheet is secured.
Carillion said £375m of its writedown related to the UK, the majority of which was from “three PPP projects”, while it said it had also come unstuck on schemes in the Middle East and Canada.
The three UK schemes are widely understood to be the £745m Aberdeen Western Peripheral Route - a bypass scheme in north-east Scotland also being built by Balfour Beatty and Galliford Try - the £335m Royal Liverpool hospital project and the £430m Midland Metropolitan hospital project in the West Midlands.
Former Balfour Beatty UK construction chief executive Mike Peasland said: “On PFI projects liquidated damages for delays can commonly be hundreds of thousands of pounds a week. It is also understood that a scheme called Msheireb Downtown Doha, a sustainable regeneration project in Qatar, is another problem job. The firm signed the £395m deal back in 2011 and is carrying out the work in joint venture with local firm Qatar Building Company.
Msheireb said it does not comment on speculation. Carillion has only said that much of its Middle East losses stem from one project.