Friday, 24 November 2017

Beleaguered Carillion wins HS2 rail contract

HS2 rail contract

LONDON: Construction giant Carillion – which issued a profit warning this month as it grapples badly-performing contracts – is among the companies that have been chosen to build phase one of the HS2 rail line.

The announcement injected some life back into the firm’s battered share price on Monday – a week after its chief executive quit when Carillion admitted an £845m hit to its finances.

Shares rose 8% in early deals as a string of major firms were awarded contracts to design and construct bridges, tunnels, embankments and viaducts for the infrastructure project – expected to cost £55bn.

The other companies included Skanska Construction UK, Costain and Balfour Beatty.

Nine bids were shortlisted for the project’s major contracts with the work valued at around £6.6bn and estimated to support 16,000 jobs.

Transport Secretary Chris Grayling defended the choice of Carillion, telling: “They’re part of a consortium – they’re not alone in the contracts, and we’ve had secure undertakings from all the members of the consortium that they will deliver that contract.

“So it’s not where one business has to deliver, it’s a group of businesses that have to deliver, and they’ve all committed to doing so.”

Mr Grayling added: “My wish is that Carillion get through their current problems, but we’ve made sure that it’s not an issue for these contracts.”

Carillion – along with Eiffage Genie Civil and Kier Infrastructure and Overseas – won lots C2 and C3, involving the building of tunnels, worth £724m and £616m, respectively.

The firm’s interim chief executive, Keith Cochrane, said: “We are delighted that our joint venture, CEK, has been selected to deliver two of the three Central contracts for HS2 Phase 1, the London to Birmingham section of the route, reflecting the strength of our joint venture.”

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