One British Company Saw 70% of Its Value Vanish This Week
- Options include equity issue, debt swap and asset sales
- Balance sheet concerns trump strategy, says Cenkos analyst
A worker uses a mobile phone outside the gates of a construction site for new apartment blocks built by Carillion Plc in the Canning Town district of London, U.K., on Friday, July 25, 2014. Balfour Beatty, the U.K. construction company whose chief quit in May after predicting a profit drop, is in merger talks with rival Carillion to form the country's biggest builder with a market valuation of about 3 billion pounds ($5 billion).
Photographer: Simon Dawson/BloombergIn 2014, U.K. builder Carillion Plc was riding high: it had just won a $434 million contract to build the Royal Liverpool Hospital and was attempting to snap up its struggling rival Balfour Beatty Plc for about $2.6 billion. Three years later, and the former Tarmac business is on life support.
Carillion has lost 70 percent of its market value this week after flagging 845 million pounds ($1.09 billion) in surprise contract provisions. In an emergency move, it installed non-executive director Keith Cochrane as interim chief executive, and called in KPMG to help review its books and balance sheet, described by Liberum analyst Joe Brent as “a mess.”