Whoever said “Anything worth having is worth waiting for” doesn’t know Carillion.

On Sunday night, the builder’s top team heard it had won contracts worth about £1.4bn as part of a joint venture to build tunnels for the High Speed 2 rail link from London to Birmingham.

For the directors, it was a toss-up between which news was the more galling: Balfour Beatty, which has risen from weakness to strength after it rejected Carillion’s suit in 2014, winning HS2 contracts worth £2.5bn; or hearing the news days after Carillion announced it was writing off more than £800m of profits, scrapping its dividend and jettisoning its chief executive. Its shares fell nearly two-thirds last week.

It would have been nice to hear from the state’s procurers earlier.

Not that the contract could save Carillion from itself — or from poor management. It has been hurtling towards the barriers for a while, caught in the classic squeeze: long-running contracts won on tight terms, rising costs, an asset-light balance sheet and heavy borrowings.

Carillion won’t see a sous of the £450m it should earn from tunnel-building for taxpayers for years. It will take longer still before investors know whether the state, as Carillion’s biggest customer, has deliberately thrown the group a lifeline (really?) and what Carillion and its partners had to promise to secure the deal.

Whatever. Carillion’s challenges are greater and more urgent. Net debt by December was about £600m — about the same as its pension shortfall — and will rise to at least £800m this year. The group’s equity is now worth about £240m.

Carillion must do more than junk the dividend to ensure it doesn’t crash into its banking covenants. The board has asked highly-priced bankers from Lazard, HSBC and now accountants EY to tell it how to cut costs, sell assets and otherwise raise cash to mend the balance sheet and carry on. A rights issue might be an option if the shares stand still long enough. Asking creditors to swap their debt for shares is another.

Winning the HS2 contract is a fillip. But it is all very well to win contracts. Holding on and making money from them will be a lot harder and may come too late.

kate.burgess@ft.com



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