Scots projects at risk as Carillion rescue plan rejected
The developer is working on an Edinburgh Waverley revamp and new Aberdeen bypass.
A rescue package for troubled construction giant Carillion has been rejected, putting Scottish projects at risk.
The developer tabled a business restructure plan on Wednesday but it is understood it failed to convince its lenders it was a strong enough proposition.
Despite its being commissioned for a range of significant government and infrastructure contracts, Carillion is struggling under a £900m mountain of debt and a £590m pension deficit.
Among its current projects are the extension of platforms at Edinburgh Waverley station, a new £745m Aberdeen bypass and two facilities management contracts with the Ministry of Defence (MoD) worth £158m which cover 83 military sites in Scotland.
The Wolverhampton-based firm's precarious finances are the focus of a meeting between the UK Government, pension authorities and stakeholders on Friday, which will attempt to negotiate a package to help it avoid collapse.
Sky News has reported Carillion has put one of the UK's largest accountancy firms on standby in the event talks fail and the company falls into administration.
Trade unions have urged ministers to step in to protect the 19,500 jobs across Britain that are now at risk.
Talks between the firm and lenders HSBC, Barclays, Santander and Royal Bank of Scotland have centred on options to reduce debts and recapitalise or restructure the group's balance sheet.
Carillion is a major supplier to the UK Government and key contractor in the first phase of building the £56bn HS2 rail line.
Its share price plunge more than 70% in the past six months after a shock profit warning wiped almost £600m from the company's stock market value in July last year.
In Scotland, Carillion was awarded last February the £23m contract to lengthen platforms at Edinburgh Waverley station for a new generation of longer electric trains on the Edinburgh to Glasgow route and the east coast line.
Network Rail, which handed out the contract, declined to comment while negotiations to secure the company's future are ongoing.
Carillion is also a key partner in the construction of the £745m Aberdeen Western Peripheral Route/Balmedie to Tipperty (AWPR/B-T) project, a new 36-mile bypass designed to reduce road congestion in the north east.
It was awarded the contract in December 2014 along with construction firms Balfour Beatty and Galliford Try as part of a joint bid under the name Aberdeen Roads Limited.
A spokesman for Transport Scotland, which manages the project, said: "Aberdeen Roads Limited has reaffirmed its commitment to the AWPR/B-T project in recent weeks.
"It has also confirmed that Carillion has no intention of withdrawing from the AWPR/B-T project and that they too remain committed to completing it in accordance with the contract.
"Carillion is one of three partners delivering the route. It would be inappropriate for us to comment on any individual contractor's internal financial governance."
Last summer, Carillion took on two five-year MoD contracts worth £158m to provide facilities management services at more than 230 military sites across Scotland, the north of England and northern Ireland.
The firm is contracted for work at 18 major military sites in Scotland including Dreghorn Barracks, MoD Rosyth, and RM Condor in Arbroath, along with 65 smaller sites.
UK shadow business secretary Rebecca Long-Bailey said: "The collapse of Carillion could provoke a serious crisis.
"It would have major implications for the outsourced government contracts the company holds, as well as the firm's thousands of workers, those in the supply chain and those who rely on Carillion's pension fund.
"The government, who despite warnings carried on with its programme of outsourcing public services to this company, must stand ready to bring these contracts back into public control, stabilise the situation and safeguard our public services."
'The collapse of Carillion could provoke a serious crisis.'UK shadow business secretary Rebecca Long-Bailey
A spokeswoman for the UK Government said: "Carillion is a major supplier to the government, with a number of long-term contracts.
"We are committed to maintaining a healthy supplier market and work closely with our key suppliers. The company has kept us informed of the steps it is taking to restructure the business.
"We remain supportive of their ongoing discussions with their stakeholders and await future updates on their progress."
The pensions regulator would not comment on whether it was attending specific meetings, but a spokesman said: "We have been and remain closely involved in discussions with Carillion and the trustees of the pension schemes as this situation has unfolded.
"We will not comment further unless it becomes appropriate to do so."
A spokesman from Carillion declined to comment.