M Debt: Construction Companies and Credit Freeze

m debt: Mursell warned that other construction companies could be caught out by the sudden credit freeze unless they also took action to strengthen their balance sheets, according to The Guardian. Kier, which employs more than 16,000 people and took on Carillion's share in HS2 and smart motorways upon its collapse, stunned the markets by warning that the risk posed by its 624m debt had increased, forcing it to raise money. The company's chief executive, Haydn Mursell, said it had been forced to act because banks had performed a 180-degree turn since the failure of Carillion and were planning to reduce or stop lending to the construction sector. It would go to shareholders for the cash but has secured promises from a group of financial institutions including Santander, HSBC and Citigroup to buy shares if investors did not want them. Kier, in a statement to the stock market, said its debt position had become more risky amid greater reluctance among financial institutions to lend to the construction sector. Its shares dived by 32.5% to 508p, cutting its stock market value by 329m to 492m. (news.financializer.com). As reported in the news.