Carillion and Caribbean Investment Holdings

I was told perhaps nine years ago that Carillion’s (LON:CLLN) accounting was highly questionable. And by no means was I alone. The surprise is that it has taken so long for all this and its effect to emerge. I hope HMG’s lawyers have been sensible when entering into contract with CLLN to ensure HMG’s losses in the event of insolvency are well contained.

*****

Latish on Friday came an RNS from Caribbean Investment Holdings (LON:CIHL). Strictly speaking it concerned only the shareholders of Midway Investments which CIHL shareholders acquired on a 1 for 1 basis in June 2017. However, the RNS pointed out that the debt due to Midway is now c. $46 million. That seems to me to be worth 30p+ per Midway share and constitutes a healthy return on five years of uncertainty, albeit garnished by an eye-watering interest bonus to be paid on the original debt of 17% p.a. Interestingly, I am told that the Government of Belize already has the cash to pay its debts. Further, the Government of Belize is well aware that, failing this debt being paid, it will be unable to raise money internationally.


The effect of this is twofold. There is the instant cash in the bank feeling that Midway shareholders should experience within the next few weeks (no guarantees here) and there is the change of sentiment at CIHL since the Government of Belize will have shown that they honour their debts. Given that CIHL is probably worth 60p or more on a break up it is possible that Lord Ashcroft will decide that enough is enough conducting a public forum for this tiny company which will never achieve a romantic rating in today’s stock market.

The bid will have to be 40p or more and its prospect means that CIHL is again a buy at 27p. Readers are warned that the market is thin.