Carillion is being investigated by the UK’s Financial Conduct Authority (FCA) over a series of Stock Exchange announcements it made before last July’s profit warning, when it said it was taking a £845m writedown.
The UK listed contracting and services company yesterday revealed the probe, which covers the period between 7 December 2016, when it made optimistic statements, and 10 July 2017, the date it announced the writedown.
In a statement, Carillion said: “The Financial Conduct Authority has notified Carillion that it has commenced an investigation in connection with the timeliness and content of announcements made by Carillion between 7 December 2016 and 10 July 2017. Carillion is cooperating fully with the FCA.”
The FCA probe comes less than two weeks after the company said it expected to finalise a rescue package by March after being given more time by its banks to fix its finances.
It was set to breach its banking covenants last month but they have now been deferred until the end of April.
Problems for the contractor originally began last year when in July it issued a shock profits warning and said it needed to keep £895m in reserve to cover project liabilities.
The news worsened in September when the company reported a £1.15bn pretax loss, warned that full-year results would be lower than market expectations, and said that it expected net debt to be between £825m and £850m.
However, there was positive news in October when chief executive of family-owned UK contractor Wates Group, Andrew Davies, announced he was joining Carillion to try to help save the company.