Britain’s Carillion lifted by Middle East bid report

Shares in Carillion have fallen nearly 75 percent since mid-July. (Reuters)
Updated 28 September 2017
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Britain’s Carillion lifted by Middle East bid report

LONDON: Takeover speculation drove Carillion shares almost 20 percent higher on Wednesday after a London newspaper reported that a Middle Eastern firm was preparing a bid for the struggling construction and support services company.
A spokeswoman said Carillion did not comment on “market speculation” in response to a City A.M. report on Tuesday which said a Middle Eastern construction group planned to submit a letter of intent for a takeover.
Carillion, whose market capitalization has dropped to £200 million ($268 million) from a peak of £1.67 billion a decade ago, is set to report first-half results on Friday.
City A.M. reported that the potential buyer would wait to analyze Carillion’s results and the state of its finances before tabling any bid.
Shares in Carillion have fallen nearly 75 percent since mid-July when it booked an £845 million writedown on construction contracts and announced the departure of its chief executive.
Carillion’s troubles have been compounded by its debt and pension obligations, as well as problems collecting cash.
The company said in July its first half average net debt was £695 million, while its pension deficit net of tax was £587 million. Carillion is selling non-core businesses and has suspended its dividend to try to reduce its debt burden.
Winning new contracts had become harder as spending in the Middle East adjusted to lower oil prices, and the firm had also experienced some delays in British public spending decisions since Britain voted to leave the EU.
Carillion has said it will focus on rail and property services as it seeks to turn itself around.


Tesla rolls out Model 3 in China ahead of schedule in sales push

Updated 58 min 34 sec ago
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Tesla rolls out Model 3 in China ahead of schedule in sales push

  • The initial deliveries will go to customers who placed their orders before the end of 2018
  • Tesla currently imports all the cars it sells in China, but is in the process of building a factory in Shanghai

BEIJING/SHANGHAI: Tesla has started delivering Model 3 cars in China slightly ahead of schedule, as it looks to revive its sales that have been hit hard by Sino-US trade tensions.
The California-based firm has already adjusted prices and added a cheaper Model 3 variant to its line-up to make its US-made cars more affordable in China amid high import tariffs.
The US luxury electric vehicle said in a statement that it held a delivery event in Beijing on Friday which “marked a significant milestone for the market.”
It had initially projected a March start for Model 3 deliveries in China — the world’s biggest auto market where overall car sales contracted in 2018 for the first time in more than two decades.
The initial deliveries will go to customers who placed their orders before the end of 2018, Tesla said. Buyers that ordered this year will start receiving their cars from end-March.
“I see its earlier-than-expected delivery as an effort to try and seize the market as quickly as possible” amid mounting competition, said Alan Kang, an analyst at LMC Automotive.
“Many of its potential customers will not only be considering Tesla’s Model 3 but also other electric car models like Jaguar’s I-PACE or that from Audi and Mercedes-Benz,” the Shanghai-based analyst added.
While auto sales in China have waned as the economy slowed, Tesla’s business was hit hard after Beijing raised tariffs on US auto imports to 40 percent in July amid the trade tensions. China has since temporarily suspended the additional 25 percent tariff, reducing it to the 15 percent level.
Tesla currently imports all the cars it sells in China, but is in the process of building a factory in Shanghai that will manufacture Model 3 cars in the initial phase and help it minimize the impact of the trade war.
The United States and China are in the midst of talks aimed at resolving their trade dispute. If the two sides fail to reach an agreement by March 1, US tariffs on $200 billion worth of Chinese imports are set to spike to 25 percent from 10 percent.
Tit-for-tat tariffs between the world’s two top economies have upended international trade flows.
Tesla’s earlier-than-scheduled delivery, however, comes as the automaker was dealt a setback on Thursday after Consumer Reports, an influential US magazine, withdrew its endorsement for Model 3, citing reliability problems.
The magazine’s decision to withdraw its endorsement, less than nine months after recommending the electric sedan, raised questions about quality that Tesla has faced since the Model 3’s difficult launch.