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Carillion issues brief, dismissive response to share price leap on chatter it's close to a rescue deal

In a statement, the small cap firm said: “The Group is not aware of any material developments that support this share price increase. Further updates on discussions with the Group's financial stakeholders will be provided as appropriate”
Construction site
Yesterday’s share price surge came after weekend press reports said the stricken company will present a plan to shareholders and lenders on Wednesday

Carillion PLC (LONL:CLLN) saw its shares slip today after it issued a brief, dismissive response to Monday’s over 25% leap in its share price on chatter that the embattled construction contractor could be close to a rescue deal, and even a potential government bail-out.

In early trading Carillion shares were down 3% at 23.15p.

In a statement, the small cap firm - which issued three profit warnings in the second half of last year – simply said: “The Group is not aware of any material developments that support this share price increase. Further updates on discussions with the Group's financial stakeholders will be provided as appropriate.”

READ: Carillion to present revised business plan as it fights for survival

Yesterday’s share price surge came after weekend press reports said the stricken company will present a plan to shareholders and lenders on Wednesday that will form the basis of a proposal to restore Carillion’s balance sheet.

The group has already said it is in talks about ways to reduce its mounting debt pile and securing new funding. Carillion has debts, including pensions of about £1.5bn, according to analysts’ estimates.

The company’s lenders, including Santander UK, Barclays and HSBC, are understood to be reluctant to provide it further loans, which could force Carillion to seek government support.

READ: Carillion - Where it all went wrong for the mega-cap turned micro-cap UK contractor

Carillion is a major supplier to the government with a number of contracts, including construction of the UK’s HS2 rail project and school building programmes.

Last week the company said it was being investigated by the Financial Conduct Authority over the timeliness and content of its stock market announcements from July 10 to December 7 last year.

Carillion’s share price plunged by 90% last July after announcing its first profit warning, a dividend suspension and the departure of its chief executive.

 -- Adds share price --

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