Canadian arm of U.K. construction giant Carillion files for creditor protection

Carillion Canada has been granted protection from creditors by the Ontario Superior Court under the Companies’ Creditors Arrangement Act.

The Canadian branch of insolvent British construction giant and state contractor Carillion PLC said on its website on Thursday that its decision to seek CCAA protection was forced by the compulsory liquidation of its parent company earlier this month after it couldn’t arrange short-term financing.

It said that event gave rise to “unexpected liquidity challenges” for the Canadian operations.

“Earlier this morning, four companies in the Carillion Canada group filed for protection,” said Simon Buttery, CEO of the Canadian operations, in an emailed statement.

“However, we expect to operate business-as-usual and without any interruption to our services under the protection of the initial order.”

The company says it employs more than 6,000 people in Canada. It said public safety remains its “top priority, be it in the maintenance and cleaning of hospitals, the clearing of roads or any of our other activities.”

According to its website, its operations include facilities management and maintenance in sectors including oil and gas, health care and aviation, as well as handling road maintenance for 40,000 kilometres of highway in Alberta and Ontario.

It is also involved in private public construction partnerships, one of which is currently building a new mental health hospital in North Battleford, Sask.

Carillion Canada said it will use the court protection to stabilize operations and consider options to satisfy creditors and the court. The initial protection period is for a month but it can be extended.

The company said the protection order covers Carillion Construction Inc., Carillion Canada Inc., Carillion Canada Holdings Inc. and Carillion Canada Finance Corp.

Canadian construction industry analyst Frederic Bastien of Raymond James said he’s not surprised Carillion has filed for protection given its parent’s financial woes.

He said he expects the company’s divergent businesses in Canada, which include equity positions in several hospitals including the Centre for Addiction and Mental Health in Toronto, will ultimately be split up and sold.

“I would expect that over time all of their assets are going to come up for sale,” he said.

“I don’t expect that Carillion Canada will re-emerge as an operating company down the road.”

He said its support services business could attract a bid from Brookfield Asset Management.

Carillion says it earns about $1 billion a year in Canada and has been working here for about 60 years.