LONDON — Troubled construction company Carillion appointed professional services firm EY to help manage its restructuring after a collapse in share price.
EY will focus on reducing debt costs and boosting cash collection, according to a statement on Monday. The move is part of a company-wide review, announced last week after Carillion saw its shares plummet to less than half their value over three days.
“We are moving forward quickly with the actions outlined last week,” said Interim Chief Executive Keith Cochrane. “My priorities are to reduce the Group’s net debt and create a balance sheet that will support Carillion going forward. We need to simplify the business and demonstrate that value can again be created for shareholders,” he said.
Shares plunged last week after the FTSE 250 revealed the enormous extent of its debts: average net debt is now between £850-900 million, with an additional £587 million for pensions.
But shares are up 8.64% as of 08:57 a.m. BST (03:57 EST) on Monday morning following news that Carillion has won a pair of HS2 contracts worth £1.4 billion.
“This ought to help its share price but whether it can deliver these contracts is another matter,” said ETX Capital analyst Neil Wilson. “It could make it a slightly more attractive prospect to rescue if it comes to that. But it’s hard to see an awful lot to be cheerful about,” he said.
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