Magic circle firms centre stage as Carillion holds talks with lenders to stave off collapse

Clifford Chance (CC), Slaughter and May and Linklaters are among a line-up of law firms advising as Carillion fights for survival, amid a Financial Conduct Authority (FCA) investigation into the company following multiple profit warnings.

The construction services company, which reportedly has debts of as much as £1.5bn, is a major government contractor, and is involved in a number of long-term projects including the HS2 London to Birmingham rail line and the London Crossrail development.

It is under pressure to refinance its business, after three profit warnings last year and a collapse in its share price which has seen it fall out of the FTSE 250. In a statement last month, it said it was in discussions with stakeholders regarding its options to reduce net debt and recapitalise or restructure its balance sheet.

The FCA also recently opened an investigation into Carillion relating to “the timeliness and content” of announcements it made “between 7 December 2016 and 10 July 2017″.

A meeting to discuss the company’s future was held yesterday (10 January) at CC’s City headquarters, attended by Carillion’s directors and lenders, which reportedly include Barclays, HSBC and Royal Bank of Scotland.

Slaughters is understood to be advising Carillion on the negotiations. The magic circle firm is a longstanding member of the company’s legal panel.

CC and Linklaters, meanwhile, are understood to be acting for a number of of the company’s lenders, with Linklaters restructuring and insolvency partner Nick Le Masurier taking a lead role for his firm.

Other lawyers involved in the negotiations include Akin Gump Strauss Hauer & Feld London restructuring partner Barry Russell, who is acting for private placement holders, and Willkie Farr & Gallagher City partner Graham Lane, who is advising convertible bond holders.

The Times reported today that a decision on the company’s future will have to be made by the end of the month.

Yesterday, in a House of Commons debate on government contracts, Cabinet Office parliamentary secretary Oliver Dowden confirmed that the government has contingency plans in place to handle the possible collapse of the company.

Dowden said: “We of course make contingency plans for all eventualities. Carillion is a major supplier to the government, with a number of long-term contracts.”

All law firms declined to comment. Carillion was approached for comment.