Carillion Set To Undergo Liquidation – What It Means For The U.K.

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Earlier today, Monday, January the 15th, 2017, the second-most massive construction company in the United Kingdom announced its impending liquidation.

Tarmac, the former parent company of Carillion plc, was founded in 1903. Less than 20 years ago, in July 1999, Carillion was formed as a spinoff from Tarmac. Although the company raked in a whopping 5.2 billion pounds in revenue from fiscal year 2016, management failed to keep debt at a reasonable level, allowing total liabilities to reach 900 million pounds, not to mention a pension deficit of 587 million pounds.

An Overarching Loss Of Interest In Carillion’s Stock Didn’t Help Its Chances

In 2016, the same year Carillion raked in more than 5 billion pounds’ worth of revenue, its market capitalization – total dollar value of stock currently held by investors around the world – hovered at a respectable, competitive 2 billion pounds.

This weekend, market cap dropped to an underwhelming 61 million pounds. In hopes of revamping its operations, Carillion reached out to the United Kingdom’s government for a taxpayer-backed bailout. Unfortunately for its corporate interests, government agencies failed to reach a deal with the construction and facilities management servicer.

There Could Be Lasting Impacts Left By Voids Carillion Was Once Set To Fill

As of the date of Carillion’s liquidation, the U.K. government had agreed to complete a whopping 450 substantial projects through the company’s services.

Of the 43,000 employees Carillion is leaving behind across planet Earth, roughly 20,000 worked in the United Kingdom, alone. Retired workers won’t be able to draw pensions, and current employees will be scrambling for new places to work.

Without Carillion, the country’s National Health Service hospitals won’t receive meals, the same said for 900 U.K. schools, as well as prisons. What’s more is the United Kingdom will be forced to find a new government road servicer, as Carillion held those responsibilities, as well.

The United Kingdom government might have to fork over more money than once agreed upon with Carillion to finish the same projects. Further, coordinating efforts with multiple, smaller companies will result in higher administrative costs, and likely delayed projects.

Carillion Already Received Financial Help Once

In July, 2017, the United Kingdom forked over roughly $180 million to help Carillion obtain business from clients in the Middle East. The quasi-bailout payment happened just before Carillion released a government-mandated profit warning due to drastic drops in net income.

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