Audit, Inspection and Safety

06.02.19

Interserve reaches rescue deal with lenders

One of the largest providers of public services in the UK Interserve has unveiled an emergency rescue deal which will see its debt slashed by more than £300m.

Its deleveraging plan is expected to reduce Interserve’s debt from £600m to £375m, achieved by issuing new shares – but will need approval from shareholders who face seeing their current holdings wiped out.

CEO Debbie White called it a “significant step forward” as the provider tries to avoid a Carillion-style collapse through restructuring.

Interserve sells services such as healthcare, construction and probation and employs 45,000 people in the UK.

Now lenders have agreed a deal that will see shareholders left with just 2.75% of the company by issuing £480m worth of new shares to be swapped with creditors for debt.

Interserve said its objective remains to secure a fully consensual deal with shareholders, but is also actively preparing alternative plans to ensure the transaction can be implemented if approval is not given.

The rescue deal will see Interserve keep its most profitable division, its RMD Kwikform construction business, after the firm had reportedly considered offloading the unit to lenders to raise money.

Interserve, who receives 70% of its turnover from government contracts, has seen its market value plummet by £483m since 2017 to just £17m.

But the firm said its financial woes are not as extensive as those of fellow outsourcer Carillion, which collapsed in early 2018.

White said: “Agreeing the key commercial terms of the deleveraging plan with our lenders, bonding providers and pension trustee is a significant step forward in our plans to strengthen the balance sheet.

“Its successful implementation is critical to the Interserve Group's future and all of its stakeholders.”

White added that the plan, alongside a transformation programme called ‘fit for growth’, will place Interserve in a strong position to be competitive in the marketplace and provide a secure future for its suppliers, customers and employees.

Interserve said it expects to launch the full deleveraging plan in the next few weeks, subject to approval from its shareholders.

Image credit - Steve Parsons/PA Archive/PA Images

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