One of the region’s most prominent regeneration projects couldbe affected by a crisis engulfing multinational construction giant Carillion.
Building work at the the former Vaux Brewery site in Sunderland could be affected if the company, which has reportedly had a rescue plan rejected by creditors, enters administration.
Carillion is a partner with Sunderland City Council in the regeneration of the Vaux site, as well as a number of other schemes in the city being carried out by joint venture Siglion.
The council says it is “pro-actively engaging” with Carillion, whose massive debt levels have led to special meetings at Government level because of the firm’s contracts on a number of major infrastructure projects around the UK.
Carillion has struggled since reporting half-year losses of £1.15bn, and also has a major pensions deficit.
Sunderland Council said Carillion’s investment in the Vaux project has already been made, but added that the group is also responsible for carrying out the building work on the site.
Once completed, the former Vaux Brewery site is set to become home to 19 separate buildings, including offices, shops, housing and leisure space.
The new Grade A office space that will be created at the site have been hailed as a major win for the city, which has lacked the necessary office space needed to attract Businesses.
A council spokesman said: “Carillion has already made its equity investment in full into Siglion.
“Carillion Construction Ltd is currently carrying out the construction work on the Vaux Phase One Building as Siglion’s contractor. These works are on-going and are due to complete in the coming months.
“The city council has retained the necessary legal protections and in the event of an insolvency affecting Carillion, it has various options available to it.
“As with all of its major partnerships and contracts, the council pro-actively engages with its partners and contractors regarding performance and commitment on an on-going basis.”
Siglion is also managing the a major housing development on a 112-acre site at Chapelgarth, and is planning to boost tourism in Seaburn through a redevelopment scheme. Carillion is not carrying out the building work for these projects, however.
Carillion is a major supplier to the Government and has won contracts to work on a number of high value projects, such as phase one of the HS2 rail line.
But the company has £900m of debt and a £590m pension deficit, and reports have emerged that a Business plan tabled by the group was knocked back because it failed to present a solid proposition for restructuring the Business.
Separate reports said that the group had put accountancy giants EY and PwC on standby in the event of an administration.
Source : Chroniclelive