Carrilion in trouble
Discussion
Dr Jekyll said:
The shareholders lost out when the firm went bust, that's exactly how it's supposed to work.
Yes.Dr Jekyll said:
Suppose it had been state owned, what would have been different?
No, it would still have been unconscionableDr Jekyll said:
Higher profit margins to give themselves a buffer?
Or would the govt have been obliged to bail them out?
Carillion promised work to companies in order to pay off already accrued debts. It's essentially a Ponzi scheme.Or would the govt have been obliged to bail them out?
popeyewhite said:
Carillion promised work to companies in order to pay off already accrued debts. It's essentially a Ponzi scheme.
....and is exactly how many contractors work using new work to fund WIP... which is fine as long as the cash keeps rolling & you are ultimately profitable. Cash flow management is rarely their best skill!!
Dr Jekyll said:
popeyewhite said:
Lining their pockets and those of the shareholders while getting deeper into debt and not paying their bills. You think that's capitalism?
The shareholders lost out when the firm went bust, that's exactly how it's supposed to work.Suppose it had been state owned, what would have been different?
Higher profit margins to give themselves a buffer?
Or would the govt have been obliged to bail them out?
Major shareholders are investigating as to exactly what has gone wrong, what on earth were the senior management and directors doing with this company, mismanaging seems to be the blunt answer. On top of that they were drawing down huge salaries and bonuses, and paying shareholder dividends when the business was in trouble. Another large question mark.
The shareholders are reliant upon Carillion returning reasonable profits, as soon as those profits look poor the shareholders should have been investigating, perhaps they were.
The pension fund is now thought to be a 2.5 billion black hole. How bad can it get? well 30,000 SME are at risk, pension fund massive black hole, Government left looking like a bunch of cretins, and the CEO and directors of Carillion laughing all the way to the bank.
Definitely not supposed to work like this.
turbomoped said:
Im curious about the share holders and wonder if it hadn't all slowly been shifted over to the clueless investors.
Im sure some thorough investigation will figure that one out
Already some people suggesting exactly that:Im sure some thorough investigation will figure that one out
https://www.ft.com/content/31c85276-fae0-11e7-9b32...
Carillion had been one of the most heavily short-sold stocks for a while before the recent collapse. Roughly 20% of all shares had been sold short since 2016, with the short interest going even higher in early 2017. It had been the big investment firms, like Blackrock (who offer absolute return funds) and a litany of hedge funds who had been leading this call, suggesting that the big players knew damn well that the company was being unsustainably managed.
The implication is that it was unsophisticated investors who would lose out: tracker funds, dividend funds, etc. and poorly informed retail investors.
Here's a representative article from last year:
https://www.fool.co.uk/investing/2017/03/17/3-ftse...
At the time this was written, short interest was reaching new highs of approx 25% of all shares. Yet here we have an article written for amateurs which is not too far off saying that this is a one-way bet.
turbomoped said:
Im curious about the share holders and wonder if it hadn't all slowly been shifted over to the clueless investors.
Im sure some thorough investigation will figure that one out
How do you shift it over to clueless investors? Seller don't need to find investors to buy, buying and selling is done via a market maker who maintains a pool. Buyers and sellers generally done have any link, and the market maker just sets prices based on demand. Im sure some thorough investigation will figure that one out
crankedup said:
Dr Jekyll said:
crankedup said:
Blame the s
tstorm on whoever you care to pick then! Point is that carillion were a sthole of a company that shafted thousands of good SME and individuals whilst lining thier own pockets.
Typical capitalist plot, lining their pockets by making such small margins they went bust.tstorm on whoever you care to pick then! Point is that carillion were a sthole of a company that shafted thousands of good SME and individuals whilst lining thier own pockets.That is not how Capitalism should be working.
Edited by crankedup on Saturday 20th January 10:27
thole.Coolbanana said:
deadslow said:
this type of modern day capitalism is basically a ponzi scheme. The banks were the same. Next time they threaten to leave the country, charter the QEII and drop them all in Lahore or some other sthole.
The UK's a big enough sthole.thole as it is so they're right at home. 
BrabusMog said:
I don't see the issue with who writes the contract? As long as everyone reads, understands and agrees, who cares who writes it? We usually prefer it when our suppliers write the terms out and we have our solicitor check it over and tell us if we need to request any amendments.
Precisely. We do all we can to deliver what the customer wants however we are not perfect and as such mistakes can be at various stages by us or the customer. The fact is the customer has final say on whether to approve what we propose to do and the cost.Its like agreeing to buy something without reading the terms and conditions for sale.
GT03ROB said:
popeyewhite said:
Carillion promised work to companies in order to pay off already accrued debts. It's essentially a Ponzi scheme.
....and is exactly how many contractors work using new work to fund WIP... which is fine as long as the cash keeps rolling & you are ultimately profitable. Cash flow management is rarely their best skill!!We also require PO's for any and all work prior to us commencing and any customer who breaches payment terms is immediately chased by our legal department and even once debt is cleared if serious enough is put on a cash upfront basis.
No money up front no work done.
WatchfulEye said:
turbomoped said:
Im curious about the share holders and wonder if it hadn't all slowly been shifted over to the clueless investors.
Im sure some thorough investigation will figure that one out
Already some people suggesting exactly that:Im sure some thorough investigation will figure that one out
https://www.ft.com/content/31c85276-fae0-11e7-9b32...
Carillion had been one of the most heavily short-sold stocks for a while before the recent collapse. Roughly 20% of all shares had been sold short since 2016, with the short interest going even higher in early 2017. It had been the big investment firms, like Blackrock (who offer absolute return funds) and a litany of hedge funds who had been leading this call, suggesting that the big players knew damn well that the company was being unsustainably managed.
The implication is that it was unsophisticated investors who would lose out: tracker funds, dividend funds, etc. and poorly informed retail investors.
Here's a representative article from last year:
https://www.fool.co.uk/investing/2017/03/17/3-ftse...
At the time this was written, short interest was reaching new highs of approx 25% of all shares. Yet here we have an article written for amateurs which is not too far off saying that this is a one-way bet.
BrabusMog said:
It may well do, but that doesn't excuse the behaviour.
I'm amazed that divi's and bonuses were paid out when the company knew they were failing. Perhaps I'm too moral.
Perhaps they didn't know they were failing when the dividends were paid, as I understand it they haven't paid dividends since the middle of last year. As for bonuses, why is that any different from paying salaries? I'm amazed that divi's and bonuses were paid out when the company knew they were failing. Perhaps I'm too moral.
crankedup said:
Definitely not supposed to work like this.
looking at relatively recent history (decades) of how big business operates in the uk i would say that is exactly how it is supposed to work . a small pool of leeches moving around various companies drawing down huge salaries and bonuses instead of ploughing profits into building cash reserves, pension funds, investment and training. i may be a bit cynical about this, but that is how it looks to me.wc98 said:
crankedup said:
Definitely not supposed to work like this.
looking at relatively recent history (decades) of how big business operates in the uk i would say that is exactly how it is supposed to work . a small pool of leeches moving around various companies drawing down huge salaries and bonuses instead of ploughing profits into building cash reserves, pension funds, investment and training. i may be a bit cynical about this, but that is how it looks to me.BrabusMog said:
I don't see the issue with who writes the contract? As long as everyone reads, understands and agrees, who cares who writes it? We usually prefer it when our suppliers write the terms out and we have our solicitor check it over and tell us if we need to request any amendments.
Depends on what's being supplied. If you are procuring half a dozen multi-million pound construction projects via competitive tenders from - say - ten contractors, the resource required and potential risk created to review and amend the various differing contracts offered by the ten contractors would be substantial.On the other hand, the milkman's contract for daily milk deliveries would probably relatively easy to review and amend.
Dr Jekyll said:
Perhaps they didn't know they were failing when the dividends were paid, as I understand it they haven't paid dividends since the middle of last year. As for bonuses, why is that any different from paying salaries?
Most people think of bonuses as an incentive to perform well or a reward for hitting certain targets, certainly not the same as salary.Carrillion certainly hasn't been performing well for a while, so bonuses seem hard to justify, and if they are a reward for hitting certain targets, who gets to decide what the targets are?
One again, like in the banking bail outs, we see high earners seemingly carrying on as normal while the ship sinks around them.
Time and again we see people defending the huge salaries of various board members/CEO's, usually using the argument that you have to pay big to get talent, and time and again we see these people walking away with bonuses or golden parachutes while the company sinks around them.
For the man in the street, this behaviour seems very hard to justify.
eccles said:
Most people think of bonuses as an incentive to perform well or a reward for hitting certain targets, certainly not the same as salary.
Carrillion certainly hasn't been performing well for a while, so bonuses seem hard to justify, and if they are a reward for hitting certain targets, who gets to decide what the targets are?
One again, like in the banking bail outs, we see high earners seemingly carrying on as normal while the ship sinks around them.
Time and again we see people defending the huge salaries of various board members/CEO's, usually using the argument that you have to pay big to get talent, and time and again we see these people walking away with bonuses or golden parachutes while the company sinks around them.
For the man in the street, this behaviour seems very hard to justify.
Jut because the company is struggling, this doesn't mean that every individual is doing their job badly.Carrillion certainly hasn't been performing well for a while, so bonuses seem hard to justify, and if they are a reward for hitting certain targets, who gets to decide what the targets are?
One again, like in the banking bail outs, we see high earners seemingly carrying on as normal while the ship sinks around them.
Time and again we see people defending the huge salaries of various board members/CEO's, usually using the argument that you have to pay big to get talent, and time and again we see these people walking away with bonuses or golden parachutes while the company sinks around them.
For the man in the street, this behaviour seems very hard to justify.
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