×

UPDATE 1-Carillion picks accountants EY to help with strategic review

(Adds details, background)

July 17 (Reuters) - Carillion has appointed accounting firm EY to support its strategic review, with a particular focus on cost cuts and cash collection, the crisis-hit British construction and support services firm said on Monday.

The company is reviewing "all options" after it booked a 845 million pound ($1.1 billion) writedown against customer payments it no longer expected to be able to collect.

Carillion, which helps maintain British railways and roads, has linked part of its problems to cost escalations on long-running public partnership contracts with governments where prices are set ahead of time.

The company said separately on Monday its CEK joint venture that includes Kier Group and Eiffage had been awarded two lots of work for a new high speed railway project to link London with the north of England worth 1.4 billion pounds ($1.83 billion).

It was not immediately clear how much of the contract work on the High Speed 2 railway would be undertaken by Carillion.

Carillion said on Monday it had identified a number of ways to reduce average net borrowing, including further cost efficiencies, an increased focus on managing working capital and on recoveries and cash collection.

"We are moving forward quickly... Alongside our own efforts, EY will provide support across the business and bring an external perspective to our cost reduction and cash collection challenge," interim CEO Keith Cochrane said in a statement.

On Friday, Carillion added HSBC to its team of financial advisers, fueling speculation that it was preparing a rights issue after a tumultuous week following its profit warning and exit of its chief executive.

Its bondholders have braced for "painful" talks as a pile-up of receivables and debt spooked investors.

($1 = 0.7644 pounds) (Reporting by Esha Vaish in Bengaluru, editing by Louise Heavens)