Stock market shares in Kier Group have dropped 7% today. This follows a report published yesterday by the Sunday Telegraph newspaper that said Kier’s lenders were trying to offload their loans with the company, by selling them to hedge funds.
The media outlet reported that lenders, including the bank HSBC, are trying to limit their losses in case the construction company collapses. The debts owed by Kier are apparently being offered for as little as 70 pence in the pound, in a bid to attract hedge fund organisations, which will take on higher risk investments.
While some fear that Kier will suffer the same fate as Carillion, others believe the company will continue to trade through a rescue deal.
The past two years have been difficult for Kier; in September the company announced pre-tax losses of €276 million, and despite the appointment of new CEO Andrew Davies earlier this year, some are suggesting that the company may go the way of Carillion and suffer collapse.
This comes just days after the Chartered Institute of Credit Management (CICM) announced that it had suspended Kier from the PPC scheme, for failing to pay its suppliers on time.
The PPC scheme sets, monitors and enforces the standards for best payment practices, including payment procedures and guidance.
A total of 20 companies were suspended by the institute, which administers the PPC scheme on behalf of the UK government’s Department for Business, Energy and Industrial Strategy.
Kier Integrated Services, Kier Construction, Kier Highways and Kier Infrastructure all lost their PPC status.
Member of Parliament Kelly Tolhurst, small business minister for the UK government, said, “The vast majority of businesses pay their bills on time and it’s encouraging to see some companies engaging with improved payment practices, allowing them to be reinstated on the Code. However, more needs to be done, and today’s action shows we are not afraid to crack down on those who do not pay suppliers on time.”
As a result of its suspension, Kier will now be invited to submit an action plan detailing how it intends to improve its payment practices, in order to be reinstated on the scheme.
CICM’s chief executive Philip King, said, “We will continue to challenge signatories to the Code if the obligatory Payment Practice Reporting data suggests that their practices are not compliant. We are encouraged by those who have already submitted action plans to achieve future compliance, and we are working closely with those businesses to support a better payment culture.”