Carillion crisis – Regional projects will continue, 49% stake in AFC could be sold off, say analysts
Analysts – Al-Futtaim has the capacity to continue but PwC may seek to sell stake
Following the news that UK contractor Carillion had entered compulsory liquidation, analysts in the UAE have said that ongoing projects, including its continuing role as a main contractor on the Expo 2020 Dubai site, under the Al-Futtaim and Carillion joint venture are unlikely to be severely affected.
Abdul Kabul Faizal, CEO of Ere Homes said that Al-Futtaim is a big and well-diversified company that had the resources to cope with the situation, a report in Khaleej Times has said. Another analyst, who asked not to be named, also said that the projects being developed by the joint-venture would be unhindered because Al-Futtaim has the capacity to handle the situation.
However, he did state that there would be additional pressure on the Dubai partner’s engineering division as it would be expected to carry out the current contracts. In such a situation, the local arm of the global player would absorb the resources and carry on with works.
According to the company website, Al Futtaim owns 51% of the JV, while Carillion has a 49% stake. An analyst with Knight Frank told Big Project ME that the accountancy firm Pricewaterhouse Cooper which is presiding over the liquidation process may seek to sell Carillion’s shares in the company.
Earlier this week, Carillion, the UK’s second largest construction company, said that talks with the UK government, banks and other stakeholders have failed to restructure debts and gain the financial support needed to continue trading while discussions continued.
Consequently, it issued a statement to investors instructing them it has “no choice but to take steps to enter into compulsory liquidation” with immediate effect.
Al Futtaim Carillion has worked on several major projects in the UAE, including high-profile developments like Dubai Festival City, Al Raha Beach, Yas Island and One Central at the Dubai World Trade Centre.
In March 2017, the contractor was awarded a $599 million contract by Expo 2020 to deliver the Theme districts and Public realm works for the World Expo 2020 site in Dubai South. That contract is scheduled to be completed by mid-2019.
ME Construction News has approached Al Futtaim Carillion, but as of the time of going to press, a company spokesperson has only offered a ‘no comment’ on the situation.
