Carillion. Close to going bust.

Val said:
Allowing debts to spiral to circa £1b is not a brexit issue, its a mismanagement issue. They've had financial issues for years, even pre-brexit.
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I agree - that is why I posted what I posted - but Brexit and associated uncertainty have certainly been very damaging in exacerbating the situation.

Meanwhile Grayling!
 
Val said:
I've just read an article that many hedge fund companies have made 10's of millions by short selling on them since 2015. One of these companies (Blackrock) has had George Osbourne as a consultant for the last year....................mental.
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Remember that, unless the 'profits' are purely 'paper' ones (ie there hasn't actually been a sale yet! - the ) then those 10s of millions of profits have come from other folk gambling that the short seller is/was (pretty much) wrong!

Here's an article that may help in understanding how it works! https://www.investopedia.com/university/shortselling/shortselling2.asp

In this (Carrilon) case, the short seller is likely to have made a real profit from the reduction(s) in the share price minus the cost of borrowing the shares from the original owner and of the trade. The original owner(s) has/have made a paper loss of difference in value between current and purchase price (probably real in this case, as the shares are now worthless) and the other party (parties) in the short trade has/have made a real loss overall of the difference between the current value and the value of the short deal (plus cost of the trade)!

And while the above uses/implies single owner, short seller and short purchaser, it's highly likely that owner and (short) purchasers will likely mitigate their losses by making 'equivalent' deals to 'balance' their positions!

Basically, it's a zero-sum (actually worse!) environment - with only the trading platform making a guaranteed profit! There is risk by all other parties involved in the deal(s)!

Note! I'm no 'expert' in Financial Instruments, though I have worked with a few (ideveloping/maintaining IT systems involved) and the above is my understanding of the way 'shorting' works!
 
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Foxholer said:
Remember that, unless the 'profits' are purely 'paper' ones (ie there hasn't actually been a sale yet! - the ) then those 10s of millions of profits have come from other folk gambling that the short seller is/was (pretty much) wrong!

Here's an article that may help in understanding how it works! https://www.investopedia.com/university/shortselling/shortselling2.asp

In this (Carrilon) case, the short seller is likely to have made a real profit from the reduction(s) in the share price minus the cost of borrowing the shares from the original owner and of the trade. The original owner(s) has/have made a paper loss of difference in value between current and purchase price (probably real in this case, as the shares are now worthless) and the other party (parties) in the short trade has/have made a real loss overall of the difference between the current value and the value of the short deal (plus cost of the trade)!

And while the above uses/implies single owner, short seller and short purchaser, it's highly likely that owner and (short) purchasers will likely mitigate their losses by making 'equivalent' deals to 'balance' their positions!

Basically, it's a zero-sum (actually worse!) environment - with only the trading platform making a guaranteed profit! There is risk by all other parties involved in the deal(s)!
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Why do you finish every sentence with an exclamation mark?
 
DaveR said:
Why do you finish every sentence with an exclamation mark?
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One of the reasons is that I know where it is on my rather well worn keyboard!

Are you going to ask Megasteve why he ends all (most) of his with more than 1 period? Btw. I don't actually care that he does!
 
Foxholer said:
One of the reasons is that I know where it is on my rather well worn keyboard!

Are you going to ask Megasteve why he ends all (most) of his with more than 1 period? Btw. I don't actually care that he does!
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No, I just find it irritating. Might need to put you on ignore.
 
DaveR said:
No, I just find it irritating. Might need to put you on ignore.
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DaveR said:
....Think I've learned pretty quickly who is worth listening to and who to ignore.
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Feel free to do so!!!!!!! :rolleyes: :whistle:

Btw. You could certainly smarten your own act up! There are grammatical errors in both of the above posts and many of your previous ones! But.... :rolleyes:
 
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bluewolf said:
Ironically enough, the boss of Carillion is an advisor to Theresa May on corporate responsibility. The bosses have also already taken steps to protect the £4m of bosses bonuses before putting the business into liquidation.
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If that's true, it's criminal (well, I know that it won't be by the letter of the law, but it should be).

Morally repugnant is probably a better term.
 
rudebhoy said:
If that's true, it's criminal (well, I know that it won't be by the letter of the law, but it should be).

Morally repugnant is probably a better term.
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The senior bosses changed the written rules regarding bonuses last year. They have now made it impossible to claim back any bonus payments if the firm is put into liquidation. It's almost as though they knew what was going to happen 🤔😤
 
SwingsitlikeHogan said:
It won't go down well with some - and it is by far not the one and only issue for Carillion, possibly not even the main one - I do not know - but Brexit and the associated uncertainty has been very damaging to Carillion. This is not my opinion - I have a friend very close to the heart of Carillion and was told this directly.

And just for background on the main UK aspect of it

https://www.theguardian.com/busines...vote-for-orders-fall-government-eu-referendum

Now you might not think that UK government should be pushing so much work Carillion's way that they become dependent upon it - but that is how it has become.

Questions to be asked of the government in respect of awarding major contracts to companies who are seriously struggling and CEO resigning; multiple profits warnings (Ah - was Chris Grayling at all involved - ah yes - HS2 and other rail contracts...well I never - what a surprise)
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Strangely enough 95% of the business one of the divisions in the company I work for, only a week to go, is govt funded. That spend is from a host of buyers throughout the UK. Not only is it not going under, its 13% up on last year... profit margin is up too.

Should we blame Brexit for that growth too?

I’ve worked with Carillion for donkey’s years on capital projects. I’m surprised they’ve lasted as long as they have. Projects overrunning all down to exceptionally poor mgt and work practices, right the way down to trades levels.

Not it in the least bit disappointed they’ve gone to the wall.
 
Foxholer said:
Remember that, unless the 'profits' are purely 'paper' ones (ie there hasn't actually been a sale yet! - the ) then those 10s of millions of profits have come from other folk gambling that the short seller is/was (pretty much) wrong!

Here's an article that may help in understanding how it works! https://www.investopedia.com/university/shortselling/shortselling2.asp

In this (Carrilon) case, the short seller is likely to have made a real profit from the reduction(s) in the share price minus the cost of borrowing the shares from the original owner and of the trade. The original owner(s) has/have made a paper loss of difference in value between current and purchase price (probably real in this case, as the shares are now worthless) and the other party (parties) in the short trade has/have made a real loss overall of the difference between the current value and the value of the short deal (plus cost of the trade)!

And while the above uses/implies single owner, short seller and short purchaser, it's highly likely that owner and (short) purchasers will likely mitigate their losses by making 'equivalent' deals to 'balance' their positions!

Basically, it's a zero-sum (actually worse!) environment - with only the trading platform making a guaranteed profit! There is risk by all other parties involved in the deal(s)!

Note! I'm no 'expert' in Financial Instruments, though I have worked with a few (ideveloping/maintaining IT systems involved) and the above is my understanding of the way 'shorting' works!
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I get how it all works however let me ask this, if they "mitigate their losses by making 'equivalent' deals to 'balance' their positions" then how do the companies who's sole aim is to make money shorting, make money?

Most of these hedge fund companies made real profit from shorting Carillion when the share price dropped following the profit warning last summer
 
I did my work experience with Carillion, some 15 years ago, as my dad was working for them at the time - when they were building the GCHQ building in Cheltenham.
 
Hobbit said:
Strangely enough 95% of the business one of the divisions in the company I work for, only a week to go, is govt funded. That spend is from a host of buyers throughout the UK. Not only is it not going under, its 13% up on last year... profit margin is up too.

Should we blame Brexit for that growth too?

I’ve worked with Carillion for donkey’s years on capital projects. I’m surprised they’ve lasted as long as they have. Projects overrunning all down to exceptionally poor mgt and work practices, right the way down to trades levels.

Not it in the least bit disappointed they’ve gone to the wall.
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On Brexit I am only relating what I have been told by my Carillion 'insider' - and he has been telling me this since the vote. Of course he could well have simply been looking at the impact Brexit uncertainty would have on UK Gov funding of projects...but you'd have thought he'd have been delighted with the vote given the £350m a week that the government would have to spend on infrastructure projects (if it so chose to do) - but no - he thought it was an insane decision. I couldn't comment.
 
Reemul said:
Surely the companies in on the contract knew the state of Carillion and there was a chance this was going to happen. Greed overcoming everything again.
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The problem is when your "in bed" with these companies and there giving you £50m worth of work it must be very hard to say no. Also they drip feed monies from previous contracts so they have you by the short and curlies.

The Carilion boss is a Tory party donor aswell.

I know a lad who is owed "Tens of thousands of pounds" for work he's done for carilion and he's still expected to be on site every morning at 8am "to see how things are". These subbies are the ones it'll hurt the most.
 
I'm interested by the fact the BBC among others in the media are critical of the fat-cat bosses who were paid around £500K+ pa.

Interesting in that the BBC quite happily pays the likes of John Humphries (~£650K PA) and other medium level 'finger-pointing' presenters well in excess of these so-called "....fat cats..." just for sitting in front of a microphone with little or no responsibility for anyone !!!
 
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