All the day’s economic and financial news, as the UK economy counts the cost of Carillion’s liquidation
- Latest: Interserve share fall amid ‘Cabinet Office concerns’
- Sub-contractors are in a ‘very precarious position’
- Job loss fears mount
- Adonis: It’s a bit like Lehman Brothers…
Tim Roache, the general secretary of the GMB union, has called on the government not to throw Carillion workers in the private sector to the wolves.
Speaking on Radio 4, Roache urged other firms working alongside the failed company to take them on.
“We want other private sector companies to take on Carillion workers with decent terms and conditions. But that takes time.
The government response to say if that hasn’t happened in 48 hours then here’s the JobcentrePlus address – that’s a scandal.
Neil Wilson of ETX Capital insists that Interserve is “no Carillion”, following the FT’s report about Cabinet Office concerns this morning.
It’s one of the most heavily shorted FTSE stocks and it has a lot of debt. Net debt was c£513m at year-end but is set to peak in the first half of 2018 as a result of refinancing, restructuring and cash flows phasing from its energy to waste contracts that were the source of the original profits warnings.
However in the case of Interserve, the arithmetic doesn’t look anything like as bad as Carillion. Even if net debt tops £600m in H1 2018m, its market cap as of Tuesday’s close was £176m, although this is likely to be lower today. Carillion was facing oblivion as its market cap declined to just £61m against liabilities of c£1.5bn.
Interserve -15%. But company’s shares no stranger to wild swings. In the past year they’ve had daily moves of:
Over in the City, shares in outsourcer Interserve have tumbled by over 10% in early trading.
This seems to be triggered by a report in the Financial Times that a team of UK Cabinet Office officials are watching the company closely.
Interserve has come under pressure from the increase in the national minimum wage as well as large losses on a waste-to-energy project in Glasgow.
Not only are a number of investors betting that the group’s share price will fall but some of its debt is trading at a steep discount to face value.
Interserve on a Cabinet Office “watch list”, reports the FT. It won a £227m DWP contract on Oct 20. The day after a monster profit warning
Here’s that domino effect in action:
Boss of cleaning firm Paragon Services, Shaun Weeks, says he’s temporarily stopped providing cleaning services to one prison until he gets more assurances – despite government saying funding will be provided for public services. More on Breakfast @bbc5live #Carillion
Construction experts have warned that Carillion’s downfall could trigger a “domino effect” among smaller sub-contractors.
“Now we are in a very precarious position where thousands of workers don’t know quite what their position is and often they can’t get on site.
“Carillion actually aren’t doing the work, they are relying on sub-contractors to do the actual building work.
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, business and the eurozone.
The collapse of Carillion continues to loom over the UK economy, as tens of thousands of workers face the threat of redundancy.
Subcontractors owed money by the construction and services giant are already being pressurised by their banks and have begun laying off workers, as the threat of contagion afflicting the sector was likened to a near re-run of the banking crisis.
Andrew Adonis, the former Labour transport minister, said: “It is a bit like Lehman Brothers [the Wall Street investment bank that collapsed in 2008].