Lloyds Group offers £50m for Carillion's small business victims

Jan 19, 2018, 02:48
Lloyds Group offers £50m for Carillion's small business victims

"Ministers are very anxious about Interserve, but the team is small and low-key as they are not wanting to unsettle", one official told the Financial Times, while another said there is "no comparison" with its collapsed rival.

Carillion collapsed on Monday in one of Britain's biggest corporate failures, throwing hundreds of large projects into doubt and forcing the government to step in to guarantee vital public services.

A spokesperson for the Cabinet Office said: "We monitor the financial health of all of our strategic suppliers, including Interserve".

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After Carillion's demise, Interserve is now the cheapest stock in the outsourcing sector, with the shares having fallen 76% in the last two years, and debt of around three times its earnings. "We are in regular discussions with all these companies regarding their financial position".

Gareth Oakley, managing director for SME banking, at Lloyds Bank Commercial Banking, said: "We know how critical it will be for businesses within Carillion's supply chain to receive support with their cashflow, to help them through the temporary challenge to their business".

"Ministers are very anxious about Interserve", said one official, according to the FT report.

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However, amidst the job losses and affected public services, 12 hedge funds have made £200 million short-selling shares in Carillion, including an investment vehicle linked to George Soros, according to regulatory data collated by Castellain Capital as reported in The Times.

United Kingdom construction and services company Carillion, which is involved in six projects in Ireland, collapsed on Monday after banks refused to lend it any more money.

This follows yesterday's news that more than 90% of the Carillion staff employed on private sector contracts will continue to be paid by Carillion's clients while its liquidation proceeds.

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A City expert said the firm was "no Carillion", but Labour argued that the situation was evidence that Carillion's plight was not an isolated case. While the company "clearly" has too much debt, there are businesses to sell and Liberum believes shareholders would support an equity raise.