lundi 15 janvier 2018

Carillon in liquidation

Don't know whether this should be here, in current affairs, or economics. If anyone wants it moved, please feel free.

Carillon is one of the UK's largest construction and facilities management companies.

http://ift.tt/2EIvPGm

Over the last few decades, governments of all shades have increased "public private partnerships" as a means of delivering infrastructure projects and services. One way to look at this is that private sector efficiency is being introduced into the moribund public sector, another way is that it's a cynical way of keeping debt associated with capital projects off the books and instead overpaying from current expenditure (and giving mates in the city a nice little earner in the process).

However you view it, Carillon has made a lot of money out of the UK government and at the same time has become vital to running public services and delivering large capital projects.

Shockingly enough, it seems that they have overreached themselves in other parts of the world, especially the Middle East and taken on some dodgy contracts. As a result they have hit the buffers financially.

I hope that billions in public funds won't go into protecting shareholders' interests and paying off loans in order to keep the lights on. I also hope that governments learn some important lessons including:
  • Not to become too dependent on one supplier
  • If you do have a major dependency, have a "disaster recovery" plan in case that supplier goes under
  • Review the effectivness of PFI/PPP as a means to deliver and operate large infrastructure projects
  • Learn how to negotiate contracts so that there is a clear exit path in the event that the supplier can no longer deliver

I'm also seething that one of the reasons mentioned for Carillon's woes is a £600m pension fund deficit. If they had been funding the pension properly all those years they were paying out generous dividends and rewarding their executives well, maybe they wouldn't have this problem.

Then again they say:

Quote:

"In recent days however we have been unable to secure the funding to support our business plan and it is therefore with the deepest regret that we have arrived at this decision."
IMO although this may be true, it's not the last few days that are the issue. The share price has crashed over the last year, and the market capitalisation has dropped 95%+ after a series of profit warnings. As recently as last year Carillon were paying out dividends. IMO you don't get in such a bad state so quickly if the business is being run properly.

I think they took the UK government money for granted, and used it to make increasingly risky business decisions safe in the knowledge that they were "too big to fail" and that if push came to shove, the government would have to bail them out. It will be interesting to see how this plays out.


via International Skeptics Forum http://ift.tt/2DzfGnn

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