After the recent collapse of this UK based contractor has claimed that this loan as a short-term financing option would help them secure further investment to help restart the companies progress.
Supposedly Carillion have actually begged the UK government for this 150 million pound loan as a short-term business loan from the UK taxpayers (click here for unsecured business loans). The company is currently on its last legs, and is desperate to avoid the collapse.
This isn’t great news, Carillion is the UK’s second largest company in construction, and it’s executives have argued that a short three month loan would allow them to finalise the company restructure and gain new commercial loans from investments which could then be used to repay the loan.
They argued the main reason existing investment wasn’t forthcoming was because of the short-term doubt around the company, that the company believes a government loan would sure up.
How they did it
It is believed that at first they requested this financing through a long 13 page letter which was sent on the 1st of January this year by Slaughter and May, who are Carillion’s legal advisors. It basically explained how the company had got into such a poor situation, and explained the restructuring plans to take them out of this mess.
It talked about how no lender would currently consider them unless they had some short term financing to carry them through.
They appealed to the UK government for other help, including early payments for current contracts, and other guarantees for future projects in construction.
This Thursday the UK Cabinet Office refused to comment whether the company had asked for this loan, however they also said it wouldn’t be appropriate for them to comment on such confidential information.
However the MP called Pat McFadden who is in Labour for Wolverhampton (the location of the company) believes the government may not have fully compared the loss that the liquidation could incur against the cost of a loan.
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