Source - SMW
HICL Infrastructure Company Limited has issued an  update on service provision following the compulsory liquidation of Carillion and reaffirmed its dividend guidance.

HICL said its priority was the continuation of services to public sector clients and the users of the facilities at the affected PPP projects. 

It said: 'Service delivery in the period since Carillion's liquidation has been stable, with no material issues, thanks to the hard work and commitment of staff, suppliers, public sector clients and project company management teams.    

'Assisted by InfraRed's asset management team, project company management teams are also in dialogue with PwC, the special managers, to ensure that funds continue to flow to the Carillion subsidiaries that are being administered by the Official Receiver, in order to facilitate payments to staff and suppliers.'  

The company said it had  made good progress implementing its contingency plans, specifically preparing for a transition of service provision from the administered Carillion subsidiaries into interim arrangements with the previously identified replacement operators as soon as is practical. 

It said the timely implementation of these arrangements, and of the ultimate objective of securing replacement operators for the long-term, was subject to continued constructive dialogue with key stakeholders.

The company previously announced that 10 projects within its portfolio had facilities management subcontracts with Carillion subsidiaries. 

It said: 'The liquidation of Carillion has triggered loan agreement defaults at most of these projects and, although the projects' lenders are currently supportive of the actions under way, those projects will be unable to make distributions whilst they remain in default. 

'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 said that as at 30 Sep, approximately 2% of the HICL portfolio was in construction, but Carillion was not the construction contractor on any of those projects. 

It said: 'There are, however, five further projects in the portfolio where Carillion was the original construction contractor and, at the time of the liquidation, held responsibility for latent defect risk. 

'Although as a result technically in default under their loan agreements, the investment adviser is confident that these will be resolved with lenders.'

HICL said its board was confident that its analysis did not change the dividend guidance that the company has published for the current financial year and the two subsequent financial years.