Interserve investigated over energy contracts

INTERSERVE is under investigation by the Financial Conduct Authority over its handling of inside information and what it told the market about exiting its troublesome energy-from-waste contracts.

Interserve had announced its intention to quit its energy-from-waste business in August 2016 after being hit by cost overruns and delays on a Glasgowbased project. At the time, it said it would have to take a £70m provision to cover leaving the contract. However, by February the following year it had increased the cost provision to £160m, sending its shares plummeting.

The investigation covers the period from July 15 2016 to Feb 20 2017. The company said yesterday it would “cooperate fully with the investigation” and would update the market on its progress in due course.

The news is the latest in a long list of problems at the outsourcer. Its chief executive Debbie White, who joined in September, has been wrestling to bring the company’s debt under control after a string of profit warnings stemming from years of wafer-thin margins.

The company warned that it was in danger of breaching its debt covenants at the end of last year, but in April it agreed a refinancing deal with its banks. The punitive terms of the deal, however, mean the lenders have an option that could hand them a 20pc stake in the company. It also reported that its losses for 2017 widened to £244m.

Meanwhile, Interserve also revealed yesterday that Ms White was paid £525,900 for the four months to the end of December, including a bonus reflecting her “exceptional” performance in the “challenging circumstances”. Her basic salary is £680,000 this year.

Its shares closed down 6.1pc at 72.3p.