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You can find the current article at its original source at https://www.theguardian.com/business/2018/feb/03/carillion-government-to-back-loans-to-firms-struggling-contractors
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| Version 3 | Version 4 |
|---|---|
| Carillion: government to back loans to firm's struggling contractors | Carillion: government to back loans to firm's struggling contractors |
| (5 days later) | |
| Companies owed money by collapsed outsourcing giant will be able to apply for support | Companies owed money by collapsed outsourcing giant will be able to apply for support |
| Press Association | Press Association |
| Sat 3 Feb 2018 09.28 GMT | Sat 3 Feb 2018 09.28 GMT |
| Last modified on Wed 14 Feb 2018 09.48 GMT | |
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| Contractors hit by the collapse of Carillion will be able to apply for government-backed loans from high-street lenders as part of a £100m support package. | Contractors hit by the collapse of Carillion will be able to apply for government-backed loans from high-street lenders as part of a £100m support package. |
| The business secretary, Greg Clark, said the British Business Bank would support high street lenders to give loans to small and medium-sized businesses, and individuals owed money by the failed outsourcing giant. | The business secretary, Greg Clark, said the British Business Bank would support high street lenders to give loans to small and medium-sized businesses, and individuals owed money by the failed outsourcing giant. |
| The move comes after three high street banks agreed to provide “tailored support” worth almost £250m to those facing a hit from the company’s collapse. | The move comes after three high street banks agreed to provide “tailored support” worth almost £250m to those facing a hit from the company’s collapse. |
| Carillion owed huge sums when it went into liquidation in January, putting thousands of jobs at risk. | Carillion owed huge sums when it went into liquidation in January, putting thousands of jobs at risk. |
| How did the company get into trouble? | How did the company get into trouble? |
| Companies like Carillion have to keep projects on budget and keep winning new contracts. When one of those fail, problems loom. | Companies like Carillion have to keep projects on budget and keep winning new contracts. When one of those fail, problems loom. |
| Carilllion shocked the market in July with a massive profit warning, writing down its value by £845m, all related to key contracts. Two more profit warnings followed and the company admitted it needed cash quickly not to breach bank loan terms | Carilllion shocked the market in July with a massive profit warning, writing down its value by £845m, all related to key contracts. Two more profit warnings followed and the company admitted it needed cash quickly not to breach bank loan terms |
| At the start of 2017 shares were changing hands at 240p. This weekend they were 14p. | At the start of 2017 shares were changing hands at 240p. This weekend they were 14p. |
| With debts of £900m it has been trying to arrange a £300m cash injection. However, lenders will not provide the cash without government guarantees. | With debts of £900m it has been trying to arrange a £300m cash injection. However, lenders will not provide the cash without government guarantees. |
| What happens to the pension scheme? | What happens to the pension scheme? |
| Carillion has a £580m pension scheme deficit. If it collapses the government-backed Pension Protection Fund would take over the scheme, although the liability would swell, to £800m. While the Fund provides a safety net for millions of workers, there are limits on what it can pay out. | Carillion has a £580m pension scheme deficit. If it collapses the government-backed Pension Protection Fund would take over the scheme, although the liability would swell, to £800m. While the Fund provides a safety net for millions of workers, there are limits on what it can pay out. |
| Who runs Carillion? | Who runs Carillion? |
| Chief executive Richard Howson quit after the July profit warning, with the new boss yet to start. It has been run by engineering industry veteran Keith Cochrane and the group’s chairman Philip Green, the former boss of United Utilities. Sally Morgan, who was director of government relations for Prime Minister Tony Blair, is also a director. | Chief executive Richard Howson quit after the July profit warning, with the new boss yet to start. It has been run by engineering industry veteran Keith Cochrane and the group’s chairman Philip Green, the former boss of United Utilities. Sally Morgan, who was director of government relations for Prime Minister Tony Blair, is also a director. |
| On Friday it was announced that 377 Carillion staff would be made redundant, although 919 had been saved as new employers took on their contracts. | On Friday it was announced that 377 Carillion staff would be made redundant, although 919 had been saved as new employers took on their contracts. |
| The latest financial support measure will provide support to high-street lenders that might not otherwise give loans to Carillion contractors because they may lack the required assets for security. | The latest financial support measure will provide support to high-street lenders that might not otherwise give loans to Carillion contractors because they may lack the required assets for security. |
| Clark said: “We want to signal very clearly to small and medium-sized businesses who were owed money by Carillion that they will be supported to continue trading. The banks have responded to my request by agreeing to support businesses and individuals affected. | Clark said: “We want to signal very clearly to small and medium-sized businesses who were owed money by Carillion that they will be supported to continue trading. The banks have responded to my request by agreeing to support businesses and individuals affected. |
| “This further guarantee will help those businesses who may not be able to provide the usual security for a loan.” | “This further guarantee will help those businesses who may not be able to provide the usual security for a loan.” |
| The previous support package announced by Lloyds Banking Group, HSBC and RBS was dismissed as a “sticking plaster” at the time by industry representatives. | The previous support package announced by Lloyds Banking Group, HSBC and RBS was dismissed as a “sticking plaster” at the time by industry representatives. |
| Clark’s department said the latest round of support would be of benefit to small businesses including the chain of subcontractors to Carillion. The guarantees can be used to support overdraft borrowing and refinancing of existing debt, the department said. | Clark’s department said the latest round of support would be of benefit to small businesses including the chain of subcontractors to Carillion. The guarantees can be used to support overdraft borrowing and refinancing of existing debt, the department said. |
| The government has set up a task force involving business and unions to support firms and workers affected by the collapse of Carillion. Its liquidation left in its wake a £900m debt pile, a £590m pension deficit and hundreds of millions of pounds in unfinished public contracts. | The government has set up a task force involving business and unions to support firms and workers affected by the collapse of Carillion. Its liquidation left in its wake a £900m debt pile, a £590m pension deficit and hundreds of millions of pounds in unfinished public contracts. |
| The British Business Bank is 100% owned by the government but is managed independently and specialises in providing financing for smaller businesses. | The British Business Bank is 100% owned by the government but is managed independently and specialises in providing financing for smaller businesses. |
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| Your stories will help our journalists have a more complete picture of these events and we will use some of them in our reporting. | Your stories will help our journalists have a more complete picture of these events and we will use some of them in our reporting. |
| Carillion | Carillion |
| Small business | Small business |
| Construction industry | Construction industry |
| news | news |
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