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HS2 seeks guarantee on crisis-hit Carillion

The government was forced to seek assurances from Carillion’s partners on the HS2 project that they can step in to deliver on the work if necessary after the company warned on profits.

Carillion is part of a joint venture that has won a bid to design and build part of the £56bn high speed rail link.

But last week the firm sacked its chief executive and said its annual figures will fall short of expectations.

A spokesman for HS2 Ltd said it was “confident” in the joint venture.

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He said: “Obviously in the light of last Monday’s announcement by Carillion, HS2 has carried out additional due diligence and sought re-assurance of both it and its two partners in the joint venture – Kier and Eiffage – that they remained committed and able to deliver the contract.

“Each company’s boards have both given that assurance and confirmed that they underwrite the performance of each other in delivering the contract. And that is the key point. HS2, of course, will continue to monitor the situation.”

Carillion disclosed on Monday that it has appointed consultancy firm EY to help with a strategic review of the business “with a particular focus upon cost reduction and cash collection”.

Under its interim chief executive Keith Cochrane, Carillion said it is taking immediate action to generate significant cashflow in the short term and cut its debt.

Carillion’s share price jumped by 23.33% to 69.25p but remains far below the pre-profit warning level of 191p.

Carillion, Kier and Eiffage of France are one of a number of partnerships that have won £6.6bn worth of contracts to build tunnels, bridges and viaducts between London and Birmingham for the first phase of HS2.

The spokesman for HS2 Ltd pointed out that each of the contracts has two parts, beginning with a 16 month design period where the government and the joint venture work closely together before starting on the second construction phase.

Source: business

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