Carillion PLC Update (8037W)
November 17 2017 - 2:02AM
UK Regulatory
TIDMCLLN
RNS Number : 8037W
Carillion PLC
17 November 2017
17 November 2017
Update on discussions with stakeholders, trading and financial
covenants deferral
Carillion plc ("Carillion" or "the Group") today provides an
update on discussions with its financial stakeholders, trading and
its intention to seek to defer the testing of its financial
covenants.
Since July, the Group has been focused on reducing costs,
collecting cash, executing its disposals programme and implementing
its new operating model. These self-help measures will serve to
reduce the Group's average net debt over time, but they will not be
sufficient to enable the Group to achieve its target net debt to
EBITDA ratio of between 1.0 to 1.5 times by the end of 2018. The
Board is therefore in discussions with stakeholders regarding a
broad range of options to further reduce net debt and repair and
strengthen the Group's balance sheet. This will require some form
of recapitalisation, which could involve a restructuring of the
balance sheet. The Board expects to commence steps to implement the
chosen option during the first quarter of 2018 and a further
announcement will be made in due course.
In its interim results on 29 September 2017, Carillion confirmed
that it was forecast to be in compliance with its financial
covenants as at 31 December 2017. As then indicated, compliance
with its financial covenants was dependent on achieving its
underlying forecasts, which assume that the normal pattern of
receipts and payments continue alongside the completion of a number
of PPP disposals and settlement receipts on contracts.
The Board has kept under continuous review the risk that
receipts from contract claims and/or disposals forecast to be
received during November and December 2017 might slip beyond 31
December 2017. The Group now expects that a combination of delays
to certain PPP disposals, a slippage in the commencement date of a
significant project in the Middle East and lower than expected
margin improvements across a small number of UK Support Services
contracts, partially offset by cost savings initiatives realised in
the fourth quarter, will lead to profits for the year to 31
December 2017 being materially lower than current market
expectations. Given the impact of delays in receipts and disposals,
the Group now expects full year average net borrowing in 2017 to be
between GBP875m and GBP925m.
Based on its latest forecasts, reflecting the items mentioned
above, the Board now expects a covenant breach as at 31 December
2017. Following discussions with its principal lenders and with
their support, the Board has concluded that it is necessary to
amend the relevant agreements to defer the test date for both its
financial covenants from 31 December 2017 to 30 April 2018 (based
on EBITDA for the 12 months to that date), by which time it expects
to be implementing its recapitalisation plan. Carillion has now
commenced a process to seek the consents necessary to make this
amendment.
Commenting, Interim Chief Executive, Keith Cochrane said:
"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 and rebuild the balance sheet. Constructive
dialogue is continuing with our financial stakeholders, and I am
grateful for their support. I remain focused on addressing this
issue before my successor, Andrew Davies, takes up the role on 2
April 2018."
This and other Carillion news releases can be found at
www.carillionplc.com.
For more information
Kellie McAvoy, Head of Investor Relations, or,
John Denning, Director Group Corporate Affairs, Carillion plc
+44 (0) 1902 906333
Teneo Blue Rubicon
Fraser Hardie/Charles Armitstead/Haya Herbert-Burns +44 (0) 207
420 3197
Notes to editors
Financial covenants
Certain of Carillion's financing arrangements contain financial
covenants that leverage (net debt / EBITDA) will be no more than
3.5 times and that interest cover (trading cashflow / net interest
pre-IAS 19 charges) will be not less than 3.5 times.
Financing arrangements
The relevant financing arrangements are Carillion's senior
additional funding facilities, syndicated revolving credit
facility, private placement notes, Schuldschein loans, committed
bonding lines and committed bilateral facilities.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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