Construction giant Carillion says it is committed to its regeneration work in Sunderland as it tries to balance its books.
The firm is a partner with Sunderland City Council in Siglion, the joint venture set up to oversee redevelopment of a number of sites across Sunderland, including the former Vaux brewery.
Carillion has been engaged in a review of its business operations since announcing a loss of nearly £1.2billion before tax in the first half of the year.
Leader of the Conservative group on Sunderland City Council, Coun Robert Oliver said: “The arrangement between the council and Carillion - in which Labour councillors sit on the board of the development arm of Siglion - is essential to the regeneration of the city centre.
“These prime development sites have been transferred to Siglion from the city at a value of nearly £20million on the basis that they will be developed over the course of the next twenty years.
“The financial plight of Carillion is, therefore, of major concern given how closely linked the company is to progress on the Vaux site and at Seaburn as well as other key sites in the city.
Carillion is in deep financial trouble, having lost £1.15billion in the first half of this year; seeing its share price plummet and facing massive losses on some of its existing development projects.Coun Robert Oliver
“Carillion is in deep financial trouble, having lost £1.15billion in the first half of this year; seeing its share price plummet and facing massive losses on some of its existing development projects.
“The company has already started to dispose of some of its operations in the Middle East and Canada and is planning millions of pounds of cost cutting in order to stabilise the company’s finances.
“Indeed, some financial experts have openly questioned whether the company can continue trading amid questions about its future and speculation about a takeover or restructure.
“All this points to uncertainty as far as Sunderland is concerned with Carillion involved in other projects which could take priority over projects here.
“It is unclear how all this will affect Sunderland both in terms of the progress of regenerating key sites and the position of business tenants and it may prove difficult for the council to find an alternative partner.”
But a Carillion statement said the firm remained fully committed to its work on Wearside.
“Carillion continues to be committed to business as usual with all our partners, suppliers and stakeholders,” it said.
“Earlier this month we announced progress on a number of fronts, including securing three new contracts worth more than £370million and an agreement to sell a large part of our healthcare business for £50million.
“These announcements follow recent major contract wins from HS2 for our JV worth £1.4billion and a five year-contract for a Carillion JV worth £158million, to provide Facilities Management services for Defence Infrastructure Organisation.
“Carillion remains focussed on executing its disposals and cost savings programme as part of work to strengthen our balance sheet.
“We are proud to be part of the Siglion project, which will play a major role in the regeneration of Sunderland.
“Our work on the first building at the Vaux site is well underway and has created jobs for local people and supported local suppliers.”