One of HS2's main contractors on the brink of collapse

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Carillion, one of the major contractors of HS2 is set to meet with lenders this week as the troubled services and construction group makes a bid to avoid collapse.

The company – a major supplier to the Government and named among the firms awarded deals for the building of phase one of the HS2 rail line – is set to meet with lenders in the coming days.

The construction group, which employs 19,500 people in the UK, is trying to secure new funding within weeks.

The turmoil has sent its shares tumbling by 90% since July.

Carillion’s chief executive, Richard Howson, stepped down in July after the first profit warning and writedown. Its new boss, Andrew Davies, is taking over from the interim chief executive, Keith Cochrane, on 22 January, three months earlier than planned.

The HS2 contractor said it was in discussions about ways of reducing debt and obtaining new funding.

A company spokesman said: “As previously indicated, Carillion is in constructive discussions with a broad range of stakeholders regarding its options to reduce net debt and recapitalise and/or restructure the group’s balance sheet.

“The group is currently finalising its business plan, which it intends to present to its financial creditors and certain other stakeholders on Wednesday 10 January, in line with the previously announced timetable.

“Once finalised, the business plan will provide the basis for the agreement of a proposal to restore Carillion’s balance sheet.”

Analysts estimate Carillion has debts including pensions of about £1.5bn, while its market capitalisation is just £81m.

However, the company's banks, which include Santander UK, HSBC and Barclays, are understood to be reluctant to lend it any more cash.

The business is currently under investigation by the Financial Conduct Authority.

The company said the Financial Conduct Authority had started an investigation into the “timeliness and content of announcements” made by Carillion between 7 December 2016 and 10 July 2017. It added that it was cooperating fully with the FCA.