HICL (HICL) share price falls on news it is braced for £50m hit from Carillion collapse but reaffirms dividend guidance
HICL Infrastructure Company today said Carillion’s liquidation had triggered loan agreement defaults at projects and management subcontracts with the firm.
At present it says the estimated impact of Carillion’s demise on HICL will be around £50m in net asset value, adding to a prior provision of £9.4m.
Shares dropped more than two per cent in morning trading.
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Carillion entered liquidation earlier this month after unsuccessful rescue talks with the government and lenders. It employed 43,000 people and had important work across defence, education and transport.
In an update to shareholders today, HICL said it had made good progress in implementing contingency plans.
It had previously announced that 10 projects within its portfolio had facilities management subcontracts with Carillion subsidiaries, with the construction firm’s collapse triggering loan agreement defaults at most of the projects. It expects the process of finding long-term replacement operators to take “a number of months”.
HICL said:
Based on current information, the impact is estimated at approximately £50m of NAV (equivalent to 2.8p of NAV per share, or 1.8 per cent of NAV per share as at 30 September 2017), which is incremental to a provision of £9.4m that was taken at the time of the company’s interim results in respect of counterparty exposure.
Despite the blow, HICL said its board was confident that it did not change the dividend guidance the firm has published for the current year and the next two financial years.
The firm it will to look for all ways to “maintain stable services in the near-term and to secure long-term, credible replacement operators”, while aiming to mitigate the disruption from Carillion’s liquidation.
The announcement is the latest amid a flurry of companies revealing the expected impact from Carillion’s troubles. Van Elle said yesterday it was facing a bad debt hit of £1.6m, while Galliford and Balfour Beatty also both said they would be affected.
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