This week’s not getting any better for Carillion.
Shares in the FTSE 250 construction and support services group dropped a further 16 per cent on Tuesday to their lowest level in 17 years, as analysts warned that it is likely to need to raise new money to secure its balance sheet after a profit warning yesterday led to the resignation of its chief executive and a 39 per cent drop in its share price.
The company – the most shorted stock on the London Stock Exchange – said on Monday that it would miss its debt reduction targets for the year and take an £845m writedown on the value of some contracts.
It cancelled its dividend and said it would begin a strategic review as it looks for a new chief executive.
Despite Monday’s massive drop in the shares, Liberum analyst Joe Brent sees little hope that things will now start to improve, noting this morning that “Carillion will get into trouble way before it breaches its covenants. [There are] no quick fixes for the balance sheet. Hard to see a solution without equity”.
At publication time, shares in the group were down 16 per cent at 98.4p.
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