Danny McCance 17 Nov 2017 12:53pm

Carillion says it may not fulfil covenants

The troubled construction services group has issued a warning that it may be unable to fulfil financial covenants, and expects a covenant breach at the end of this year

Despite taking measures to reduce net debt, Carillion today said in a statement that it was considering recapitalisation.

In July, the firm issued a profit warning and revealed that it had been forced to make £845m worth of writedowns due to cashflow and debt issues. EY was brought in to support Carillion in a strategic review at this time.

In September, the group issued its second profit warning alongside results from the strategic review, but confirmed it was forecast to remain in compliance with covenants.

“Whilst we continue to target cash collections, reduce costs, execute disposals and focus on delivering for our customers, it is clear that significant challenges remain and more needs to be done to reduce net debt,” said interim chief executive Keith Cochrane.

The firm suffered another setback in September when chief financial officer Zafar Khan resigned after spending just over a year in the role.