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Carillion creditors call in advisers ahead of possible debt restructure

Carillion’s creditors are rushing to appoint advisers amid speculation the construction firm is due to restructure its debt pile.

According to Bloomberg, the holders of up to £520m of the contractor’s debt have hired several law firms and advisers in anticipation of a possible debt-for-equity swap by Carillion as part of moves to repair its balance sheet. 

Holders of £350m of private notes are believed to have appointed Houlihan Lokey as advisers and Akin Gump Strauss Hauer & Feld as legal advisers.

In addition, holders of £170m of notes are said to have brought in Willkie Farr & Gallagher as legal advisers.

Last month Carillion announced plans to offload several parts of its business operations as part of a plan to shrink the balance sheet and consolidate debts.

In its latest trading update Carillion posted a pre-tax loss of £1.15bn for the six months to 30 June 2017, compared with a pre-tax profit of £84m in the same period a year earlier.

Half-year net debt hit £591m, up from £291m in the previous year. The previous profit warning focused on problem construction contracts, resulting in £845m of writedowns.

Interim chief executive Keith Cochrane confirmed that the company would cut £10bn from its project pipeline as part of a new approach to winning work.

The firm also announced that it would raise £300m from disposing of non-core businesses.

The Wolverhampton-based contractor pledged to refocus on “low-risk procurement routes only” following a series of problem contracts in the UK and the Middle East.

Carillion’s share price has fallen dramatically since the turn of the year, plummeting from 238.30p on 1 January to stand at 43.12p in trading today.

According to equities analyst Alastair Stewart, a strategic review of the business may take up to five years to turn the company around.

Sky News reported last month that UK lenders to Carillion had appointed FTI Consulting to advise on options for the firm. The lenders are believed to include Barclays, HSBC and Royal Bank of Scotland.

Carillion declined to comment.

FTI Consulting, Houlihan Lokey, Akin Gump Strauss Hauer & Feld and Willkie Farr & Gallagher have been contacted for comment.

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