Pension trustees at Carillion, the crisis-hit construction group, have called in the world’s largest audit firm to advise them amid a massive financial restructuring.
Sky News understands that the trustees are working with PricewaterhouseCoopers (PwC) on options to safeguard members’ interests, even as Carillion’s pension deficit soars to nearly £600m.
The appointment, which is understood to have been made several weeks ago, has emerged just hours before Carillion is due to present its delayed half-year results to the City.
A huge profit warning in July plunged the future of the company, which is working on the HS2 rail link among other projects, into doubt.
The sudden crisis has caused particular alarm at The Pensions Regulator, which sources said had instructed Carillion to appoint its own advisers with expertise in restructuring large pension schemes.
“The regulator is taking a particular interest in Carillion given the potential for things to go badly wrong,” said one City source.
Carillion announced during the summer that it was working with EY, Lazard and HSBC as advisers on a string of asset sales, cost reduction measures and other initiatives to improve the state of its balance sheet.
Sources said on Thursday night that the company was likely to get a green light from KPMG, its auditor, to present its results on a going concern basis.
They will be covered in red ink, however, because of writedowns totalling more than £800m – figures which were responsible for Carillion’s chief executive, Richard Howson, being forced out of his job.
The company’s main lenders have also drafted in advisers from FTI Consulting to steer them through the looming financial restructuring, which could entail a debt-for-equity swap or rights issue.
As well as Mr Howson, Carillion’s finance director and other top managers have also left in recent weeks.
The company plans to sell a number of divisions in the Middle East, Canada and the UK healthcare sector to raise several hundred million pounds to help shore up its balance sheet, although sources indicated that there was unlikely to be firm news of these with the results on Friday.
Carillion is one of the UK’s most important infrastructure delivery companies, with a major presence in maintaining roads, rail services and military bases.
While it now has a market value of just £240m, the company carries a huge multiple of that sum in debt and other liabilities.
Carillion has annual revenues in excess of £5bn, and employs approximately 43,000 people.
The company and PwC declined to comment.
Source: Sky News