Blame game erupts at Interserve
Lloyds grandee among bosses under fire at bombed-out state contractor
LLOYDS Banking Group’s chairman has been dragged into the crisis at Interserve, having led the ailing outsourcer for a decade.
With fears mounting that the service support and construction group could follow Carillion into oblivion, the spotlight has turned on the company’s former and current decision-makers – including Lord Blackwell.
Analysts said the seeds of the crisis were sown years ago when bosses embarked on a dangerous expansion plan.
The aggressive push for growth – and a disastrous move into the energy-from-waste sector – was spearheaded by then chairman Blackwell, chairman of Lloyds, and chief executive Adrian Ringrose.
Having made millions during their time at Interserve, Blackwell ( pictured left in 2016 and Ringrose in 2017 following a collapse in the share price.
shares have continued their slide under the new management led by chairman Glyn Barker and chief executive debbie White.
The stock fell another 75pc in early trading yesterday before closing down 53.1pc, or 13p, at 11.5p.
Interserve has lost 98pc of its value in less than five years and is valued at £17m, just a fraction of its more than £600m crippling debt pile.
Union chiefs at Unite warned that Interserve could become ‘Carillion mark two’ following the collapse of its rival earlier this year.
Russ Mould, investment director at online stockbroker AJ Bell, said: ‘The 2010 plan to try and double earnings within five years was a big contributing factor to Interserve’s current woes.
‘Any company that focuses just on growth is potentially going to be taking risks, especially if it uses debt, acquisitions and diversification to get there.
‘The new management team has inherited a weak position, boxed in by debt and the problematic energy from-waste contract, although the share price would suggest that investors had not received as much reassurance on cash flow and debt as they would have liked.’
david Madden, analyst at City trading firm CMC Markets, said: ‘Interserve has been struggling for a number of years, but it couldn’t manage to turn itself around. Firms only seek a rescue plan when they are circling the drain, and given the similarity with Carillion, investor confidence has been shattered.’
Blackwell, 66, made more than £1.3m during his time as chairman of Interserve from 2006 to 2016, but from April 2014 he juggled his time at the company with the role of chairman at Lloyds. directors are not encouraged to take on too many high-level board roles as it may make them lose focus.
Blackwell joined Lloyds at a time when the bank was returning to health following the financial crisis. He was also chairman of scottish Widows from 2012 to 2014, a non-executive director at standard Life from 2003 to 2012 and tech group Halma from 2010 to 2014.
Ringrose, 51, became chief executive in 2003 and was paid at least £15m between 2004 and 2017. He announced his resignation in November 2016 after the company released a series of profit warnings. The company was struggling with rising debt, internal restructurings and a slowdown in the outsourcing sector.
Julie Palmer, a partner at restructuring consultant Begbies Traynor, said: ‘Hindsight shows [the energy from-waste expansion] was wrong way to go, but I don’t think Interserve is a Carillion. I think it’s better managed. There is a stronger team now and they are managing the crisis the best they can.’