HICL to take £50m hit following Carillion collapse

The company’s liquidation has triggered loan defaults on most of its projects contracted by HICL, but is not expected to impact the fund’s dividend guidance.

London-listed infrastructure fund HICL is expecting a £50 million ($71.2 million; €57.2 million) fall in its net asset value following the demise of construction group Carillion.

The group said the contractor’s liquidation has resulted in loan defaults on most of the 10 projects for which Carillion had facilities management subcontracts. HICL said the £50 million hit was a preliminary assessment of the impact of the company’s collapse.

However, it noted there are no plans to change dividend guidance for the current financial year – or for the next two. HICL had earlier stated it plans to deliver aggregate dividends of 7.85p per share for the current financial year and 8.05p for the next financial year, ending 31 March 2019.

“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,” HICL stated. “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.”

HICL said earlier this month, following Carillion’s liquidation, that contingency plans had been activated and that investment advisor Infrared had been working on them for some time. Carillion’s services to HICL’s projects account for about 14 percent of its portfolio value. The contractor collapsed with debts of more than £500 million, in addition to a pension deficit of nearly £600 million.

HICL’s net asset value per share stood at 151.6p, as at the end of September. Investments at fair value were £2.7 billion, according to its latest interim report.

Fellow listed infra fund JLIF said Carillion’s fall would have no material impact on the company, although plans to replace the group on some of its projects would cost £3 million.