Britain's Carillion collapses as banks refuse to lend it any more money

By Kate Holton

LONDON (Reuters) - British construction and services company Carillion collapsed on Monday when banks refused to lend it any more money, throwing hundreds of major projects in doubt and bringing down one of the government's most important suppliers.

Carillion was forced into compulsory liquidation after costly contract delays and a downturn in new business that prompted a string of profit warnings and a first-half loss of more than 1 billion pounds ($1.4 billion).

"In recent days we have been unable to secure the funding to support our business plan and it is therefore with the deepest regret that we have arrived at this decision," Chairman Philip Green said.

"This is a very sad day for Carillion, for our colleagues, suppliers and customers that we have been proud to serve over many years," Green said.

Carillion's creditors include RBS, Santander UK, HSBC and others. It has debt and liabilities of 1.5 billion pounds.

Employing 43,000 people around the world, including 20,000 in Britain, the 200-year-old company runs public services from hospitals to train lines and ministry of defence sites.

It has also built construction projects such as London's Royal Opera House, the Suez Canal road tunnel and Toronto's Union Station. In July last year it won contracts to build Britain's new High Speed 2 rail line, a major project that will better connect London with the north of England.

Tensions around Carillion have been ratcheting up for weeks, forcing the government to hold a string of crisis meetings to discuss how they should respond. Unions and the opposition Labour Party had argued that taxpayers should not bail out the failing company.

Carillion said the government would provide the necessary funding to maintain the public services carried out by its staff, while PricewaterhouseCoopers will oversee the process.

(Reporting by Kate Holton; editing by Guy Faulconbridge)