Carillion appoints new advisers in the wake of its week from hell

Beleaguered construction services group Carillion has appointed new financial advisors and brokers in the wake of its dramatic fall from grace.

The Wolverhampton company has endured the week from hell after seeing around 70% wiped off the market value of its business after it a dramatic profit warning on Monday.

Yesterday was a calmer one for the FTSE 250 company although its share price still declined. However, the 3% fall – ending the day at 55.45p – was less dramatic than the losses incurred during the first three days.

The company’s decline has seen its market cap reduced to £242.45m.

To try and stem the tide and inject some fresh thinking into the business, it announced in a market update today that it had appointed HSBC Bank as its new Joint Financial Adviser and Joint Corporate Broker with immediate effect.

The company revealed on Monday that H1 operating profit was likely to be lower than previous estimates primarily due to complications with its Public Private Partnerships (PPP) contracts.

It said a deterioration in cash flows on a number of construction contracts had led the board to initiate an enhanced review of all of the group’s material contracts.

The review identified an £845m hit to the PPP deals – of which £375m related to the UK and £470m to overseas markets.

As a result, Carillion said full-year revenue was now expected to be between £4.8bn and £5.0bn, with an overall performance below management expectations.

Alongside the announcement, Carillion said chief executive Richard Howson was stepping down with immediate effect with Keith Cochrane filling in on an interim basis until a successor could found.

The review of the business and its capital structure is understood to be considering all options for the business.

An update on its progress is expected when the company issues its interim results in September.

Measures already introduced have seen the company exit from all construction PPP projects as well as a withdrawal from construction markets in Qatar, Saudi Arabia and Egypt.

In future, it has said it will only be undertaking construction work on a highly selective basis and via lower-risk procurement routes.