HICL and INPP reassure on Carillion exposure – HICL Infrastructure Company Limited has made an statement following the recent announcement from Carillion plc regarding its compulsory liquidation.
Acting through the Risk Committee, the HICL board and InfraRed, the company’s manager, make ongoing assessments of counterparties, potential issues in the HICL supply chain and related contingency planning. In particular, a contingency plan has already been developed that specifically contemplated a scenario where Carillion enters liquidation and InfraRed has been working for some time with a number of potential replacement service providers. The contingency plan has been activated and the InfraRed Asset Management Team is working in conjunction with all stakeholders to ensure continuity of service provision at the relevant PPP projects.
Carillion provided facilities management services to 10 of the PPP project companies in which HICL is invested, representing approximately 14% of the value of the portfolio. HICL says that its overriding objective is to protect the delivery of services to stakeholders, including its public sector clients and the users of the facilities that form part of the relevant PPP projects. The HICL board and InfraRed are confident the actions already under way will achieve this and that permanent replacement facilities management services providers will be secured as soon as practicable. A further update will be issued in due course.
Update 12:00 15 January 2018
International Public Partnerships Limited says that the asset management team within its investment adviser has been aware for some time of the issues affecting Carillion plc and has developed contingency plans accordingly. These involve the asset manager working to transition the projects for which Carillion Services Limited (‘Carillion FM’) have facilities management responsibilities to a new facilities management contractor or contractors. Over recent months the asset manager has had specific discussions with identified alternative contractors to replace Carillion on affected projects and these will now be further developed. In the meantime, all the affected facilities are currently open and operating normally. Carillion FM have also indicated that they expect to continue to discharge all their facilities management obligations in line with their contractual requirements in the short term.
INPP advises that facilities management services are provided by Carillion FM to c.3% (by investment fair value) of the Company’s portfolio. All the affected projects are operational. The liquidation of Carillion plc is also in some cases an event entitling project lenders to “lock up” distributions from projects where they have guaranteed the performance of the facilities management services.
While the occurrence of any such “lock up” would not be expected to have any material impact on INPP’s cashflows for the foreseeable future it would require the taking of remedial action and the contingency planning noted above has taken this into account.
The Company does not currently believe that the liquidation of Carillion is likely to have any significant valuation impact on the Company but will continue to monitor and manage the situation as it evolves.
HICL / INPP : HICL and INPP reassure on Carillion exposure