HS2 contractor Carillion investigated by FCA

Carillion is under investigation by Britain’s financial watchdog in another blow to the troubled construction firm, which is involved in several major building projects in the UK.

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.

Carillion’s share price has collapsed from 240p at the start of last year, and tumbled a further 7.3% in early trading to 16.65p.

The company, which is one of the firms working on the HS2 London to Birmingham rail line and the revamp of Battersea power station, has issued three profit warnings in five months after writedowns of more than £1bn. Saddled with debts of £1.6bn, it is looking for refinancing that will involve its lenders swapping their debt for shares.

The contractor came close to breaching the terms on its lending last month, but lenders – led by HSBC, Barclays and Royal Bank of Scotland – agreed to give it four months’ extension. It now has until 30 April before its covenants will be tested.

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

The firm has worked on the expansion of Liverpool FC’s main stand at Anfield, Birmingham’s flagship library and the £335m Royal Liverpool University hospital. Some of these projects have run into problems, such as the Royal Liverpool. Carillion has also been affected by cuts in spending by governments in the Middle East prompted by low oil prices.

The Wolverhampton-based company employs 43,000 staff, two-thirds of them in the UK.