Bank rescue at Interserve
INTERSERVE, the outsourcing giant striving to avoid a Carillion-style collapse, has agreed a rescue deal in which its lenders will take control and existing shareholders are virtually wiped out.
The Government contractor employs 45,000 people in the UK in key services such as schools and hospitals as well as construction projects and has annual revenue of more than £3billion.
Investors will be left with just 2.5 per cent after its £600million-plus of borrowing is slashed to about £275million through a debt-for-equity swap.
Interserve will also keep its profitable building materials operation RMD Kwikform, on to which it will load £350million of debt.
It is believed the company had been considering handing RMDK to its lenders but the move was opposed by the Government because it would leave the remaining business too weak to win contracts. The proposals are subject to shareholder approval.
US hedge fund Coltrane, which owns over 15 per cent, wants a clear-out of the entire board except its chief executive Debbie White and has called for its own David Frauman and Stuart Ross to be appointed as directors.
Interserve’s finances had come under intense scrutiny following last year’s collapse of debt-laden rival Carillion, which forced the Government to step in to guarantee services and led to a parliamentary inquiry.
White said: “Agreeing the key commercial terms of the de-leveraging plan with our lenders, bonding providers and pension trustee is a significant step forward in our plans to strengthen the balance sheet… this proposal has been achieved following a long period of intensive negotiation and has the support of our financial stakeholder and Government.
“Its successful implementation is critical to the Interserve Group’s future and all of its stakeholders. The plan will, alongside our ‘Fit for Growth’ transformation programme, place us in a strong position to deliver our strategy, be competitive in the marketplace and provide a secure future for employees, customers and suppliers.”
Interserve shares, which have fallen by about 95 per cent over two years to leave the company valued at less than £20million, fell ¼p to 13p.
Liberum analyst Joe Brent said: “We believe that this is an intelligent deal which seeks to secure the future, while providing some return to the banks.”