Kier share price slumps as lenders ‘seek to offload debt’
Kier’s share price slumped seven per cent today following a report alleging lenders are trying to pass on its debt to hedge funds.
Kier fell 8.4 per cent to 107.6p in early trading, with HSBC supposedly marketing the firm’s debt for as little as 70p in the pound.
Read more: Kier lenders ‘try to offload outsourcers’ debt’
Lenders are trying to cut their losses to avoid being exposed if Kier collapses, a fate suffered by former peer Carillion, which went bust at the start of 2018 with debts of £1.5bn.
Hedge funds could pounce on the debt sale to seize control of the company, according to the Telegraph.
Despite similarities with Carillion, City commentators told Morning Wire the situation was more similar to Interserve. The business fell into administration earlier this year but kept tradingt through a rescue deal.
Kier undertakes a substantial amount of infrastructure work for the government, such as building railways and schools.
“We monitor all our strategic suppliers closely and government officials meet with them all regularly to discuss their financial and strategic situation as well as to discuss the performance of government contracts,” a Cabinet Office spokesman said.
Kier is contracted to do millions of pounds of work on the government’s controversial HS2 railway scheme and Hinkley Point C nuclear reactor projects.
But the firm’s share price has plunged 88 per cent over the last year amid numerous profit warnings.
The firm’s stock plummeted 40 per cent in June when it revealed operating profit would fall £25m below previous forecasts.
Read more: SIG profit warning sends ripples through construction industry
It fell to a staggering £245m loss in its latest full year results despite efforts to slash net debt after former chief executive Haydn Mursell was forced out of the firm.
New boss, ex-Carillion chief executive Andrew Davies, said the firm was “building firm foundations for the future” in September.