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Ontario winter road maintenance will continue despite Carillion Canada's uncertain future

'As it stands right now, we have an agreement with Carillion that takes us until the end of the winter and ensures our roads are safe,' said an Ontario Ministry of Transportation spokesperson

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TORONTO — Ontario’s Ministry of Transportation says there’s no reason to be concerned about road safety, despite the financial uncertainty facing one of its main road maintenance contractors.

NDP transportation critic Wayne Gates raised the alarm this week, telling Postmedia he’s worried Carillion Canada — which has eight of 20 winter road maintenance contracts in Ontario — might go under as soon as Monday. Should it cease operations, Gates fears Ontario roads will be left unattended, potentially creating a very dangerous situation for drivers. 

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The province of Ontario has used contractors for winter road maintenance since 2000. Carillion is responsible for roads in Bancroft, Chatham, Huntsville, Kingston, London, Peel/Halton, Simcoe, and Thunder Bay, and is regulated by Ontario’s Ministry of Transportation with respect to highways (cities can contract out their own companies to maintain municipal roads).

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But the ministry said Friday there’s nothing to be worried about — Carillion is still operating and roads are being maintained as per usual. 

“As it stands right now, we have an agreement with Carillion that takes us until the end of the winter and ensures our roads are safe,” said Celso Pereira, press secretary for the Ontario Ministry of Transportation.

As it stands right now, we have an agreement with Carillion that takes us until the end of the winter and ensures our roads are safe

“The absolute number one priority is ensuring that everyone is able to travel on not just safe roads, but well-maintained roads. If, for some reason or another, Carillion is unable to perform those duties, then we will have to re-examine and we do have a contingency plan in place if something like that does happen.”

No details regarding the contingency plan have been revealed, with Pereira saying they must be kept confidential “due to commercial sensitivities.” He said the contract with Carillion will be re-evaluated at the end of the winter and that the government will not bail the company out of any debt it’s incurred. 

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A site photo of Carillion Canada site on Tuesday January 16, 2018 on Highway 7 in Peterborough, Ont. Carillion is a Canadian service provider, maintaining and protecting approximately 40,000 kilometres of highways across Ontario and Alberta, providing year-round routine and preventative maintenance services.
A site photo of Carillion Canada site on Tuesday January 16, 2018 on Highway 7 in Peterborough, Ont. Carillion is a Canadian service provider, maintaining and protecting approximately 40,000 kilometres of highways across Ontario and Alberta, providing year-round routine and preventative maintenance services. Photo by CLIFFORD SKARSTEDT/PETERBOROUGH EXAMINER

“We don’t owe them any money and they don’t owe us any money,” he said. “We’re continuing to pay them but only for the services they provide.” 

According to Carillion Canada’s assistant communications manager Cody Johnstone, there is no truth in the claim that the company will go under by Monday. “As far as things are right now, there are no plans for ceasing operations,” he said. 

Gates also claims Carillion employees in his riding reached out with concerns that they won’t be paid starting next week, but Pereira says there’s no evidence to support this claim. 

“We’re monitoring funds as closely as we possibly can to verify that all employees are being paid and all suppliers are being paid, and to date we have absolutely no concerns in that regard,” he said.

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More than 6,000 people are employed by Carillion Canada and the company prides itself on providing road maintenance service for nearly 40,000 kilometres of highways in Ontario and Alberta. This includes pavement marking, repairing roadside features like barriers, and winter plowing and salting. 

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In Alberta, the company has three contracts and accounts for more then 30 per cent of the province’s outsourced highway market. Last month, similar concerns over the fate of road maintenance in the province were brought to light, with the ministry also noting an elusive contingency plan. 

As far as things are right now, there are no plans for ceasing operations

Cody Johnstone, Carillion Canada's assistant communications manager

Carillion Canada’s parent company, which is based in the UK, was forced into liquidation earlier this year. Shortly after, the Canadian company was granted creditors’ protection, an announcement  accompanied with a statement saying, “this is not a bankruptcy or liquidation filing.” According to insolvency lawyer Richard Howell, it’s never a good sign when a parent company goes under. But, he says many companies will carry on quite successfully under creditors’ protection. 

This protection is granted through the Companies’ Creditors Arrangement Act, a federal law that allows insolvent companies to restructure their business and financial affairs. The idea is to prevent a company from going bankrupt, which Howell describes as a means of “rescuing” a company until it’s back on its feet.

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This month, Fairfax Financial Holdings Ltd. signed a deal to buy part of Carillion Canada, which according to Howell isn’t uncommon because companies under credit protection can usually be sold dirt-cheap. As for the future of the company, Howell said it’s too early to know for sure. 

“My best guess is (Carillion) will at least continue through the the next month or two,” he said. “It will probably just be business as usual.”

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