January 26, 2018 / 9:06 AM / a year ago

UPDATE 1-Carillion collapse triggers defaults at projects with HICL

(Adds details, analyst notes)

Jan 26 (Reuters) - British investment firm HICL Infrastructure said on Friday the collapse of Carillion had triggered loan defaults at projects and management subcontracts with the construction outsourcing company, sending its shares to a three-year low.

Britain’s biggest corporate failure in a decade took place after banks pulled the plug on lending to Carillion. As a result, Carillion went into liquidation, forcing the government to step in to guarantee public services provided by the company ranging from school meals to road works.

“The company previously announced that 10 projects within the HICL portfolio had facilities management subcontracts with Carillion subsidiaries. The liquidation of Carillion has triggered loan agreement defaults at most of these projects,” HICL said in a statement

“This situation is expected to continue until long-term replacement operators are in place, a process that the company anticipates will take a number of months,” it added, without giving details of the projects.

The projects won’t make any distributions to investors while they remain in default, HICL said. The fund said, however, that there would be no impact on its dividend guidance.

HICL shares were down 0.5 percent at 146.8 pence at 0850 GMT, their lowest since November 2014.

The current estimated impact of Carillion’s bankruptcy on HICL would be about 50 million pounds ($71 million) in net asset value, adding to a prior provision of 9.4 million pounds, HICL said.

HICL, which has 116 investments in infrastructure projects in Britain, Australia, Canada, France, Ireland and the Netherlands, said service delivery since Carillion’s collapse had been stable.

HICL’s projects involve sectors including education, health and transport.

$1 = 0.7021 pounds Reporting by Noor Zainab Hussain in Bengaluru; Editing by Mark Potter

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