Carillion PLC (LON:CLLN) shares dropped by over 15% today as the firm said it is exploring options including a share issue to shore up its battered balance sheet after the troubled firm warned its full-year results would be lower than market expectations.
The warning came as the small cap firm posted a massive first-half loss after further hefty charges for contract provisions, with Carillion shares having lost two-thirds of their value since July when it announced the writedowns.
READ: Carillion warns on full-year results, as it posts a massive first half loss after booking further contract provisions
The group booked a further £200mln charge for support services contracts in addition to an £845mln writedown on problematic construction contracts announced in July, which had prompted the departure of is chief executive.
In today’s results statement, Carillion said: “While self-help measures will lead to a material reduction in our average net debt, these alone will not be enough to achieve our target."
It added: “The board is therefore considering other available options, including raising equity to repair and strengthen the balance sheet in due course."
Analysts said they have expected Carillion to have to raise new funds to shore up its balance sheet, although uncertainty over its contracts, its debt position and its pensions obligations have raised questions over the value of the company.
READ: Carillion's management shake-up raises further questions about firm's troubles, says UBS
In a note to clients, this morning, analysts at Liberum Capital said: "We believe that the business could have an enterprise value of £1.6bn.”
In late afternoon trading, Carillion shares were down 15.2%, or 9.75p at 55.50p.
Shares in Carillion rose earlier this week after a newspaper reported that a Middle Eastern buyer was considering a bid for the group.
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