Carillion wins place on UK school-building framework
Updated : 11:35
Carillion has been chosen as one of nine contractors to work on two lots on the government's school building framework, which it said should be worth a combined £2.6bn to the companies involved.
Winning a place on the framework from the Education & Skills Funding Agency, which covers school building projects through to 2021, is another potential future lifeline for the embattled construction and outsourcing company.
Carillion, which won a place on both high-value lots in the frameworks for which it bid, covering £12m-plus contracts the north and south of England, is in talks with its lenders in order to avoid breaching its debt covenants.
Keith Cochrane, Carillion's interim chief executive, said: "We are pleased to have re-secured our position on this framework, demonstrating that we continue to retain the confidence of key customers despite the group's current challenges."
Carillion shares were trading at 22p just after 1100 GMT on Monday, up 2% in the session but almost 50% lower than before the company's warning on Thursday that its full-year profits will be “materially lower” than market expectations and that it was in discussions with lenders over options to cut net debt and repair the balance sheet, otherwise it will breach its covenants by the end of the year.
A combination of delays to certain Public Private Partnership disposals, a slippage in the start date of a significant project in the Middle East and lower than expected margin improvements across a small number of UK Support Services contracts all contributed to dragging on profits for the year to 31 December.
In addition, given the impact of delays in receipts and disposals, it now expects full year average net borrowing in 2017 to be between £875m and £925m. After reporting a £1.15bn loss in September, it had said that full-year average net debt was expected to be between £825m and £850m.
The company also said that following discussions with its principal lenders it is necessary to amend the relevant agreements to defer the test date for both its financial covenants from 31 December 2017 to 30 April 2018, by which time it expects to be implementing its recapitalisation plan.