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Carillion : dealt another blow as BT`s Openreach investigates 1.5bn contract Share

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07/19/2017 | 10:42 am

Carillion PLC (LON:CLLN) has run into more troubles after Openreach reportedly launched an investigation into its 1.5bn contract with the construction company.

Openreach, the network subsidiary of telecoms giant BT Group PLC (LONBT.A), is said to be looking into whether Carillion will be able deliver upgrades to Britains internet infrastructure given its recent struggles, City Am reported.

Carillions share price tumbled 71% last week after warning on full year revenues, suspending its dividend and launching a review into its business and capital structure.

Shares rebounded yesterday after the company announced two contract wins to build the UKs HS2 rail line and the appointment of accounting firm EY to support its efforts to avoid collapse.

But shares were still down 65% since the start of last week amid worries that the group will need to launch a rights issue or a debt-for-equity swap to avert bankruptcy or an emergency takeover.

Carillion and junior partner Telent signed an extended three-year contract with Openreach in February. Carillions share of the contract is worth 900mln over the full five-year period.

An initial investigation into the agreement has revealed that delivery of contract would be protected in the event of a Carillion collapse but Openreach is taking a closer look to make sure the project is safe.

Openreach, Carillion and Telent declined to comment on the investigation.

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