Interserve warns on rising debt and low orders

TROUBLED outsourcing giant Interserve warned its debt pile at the end of this year would be higher than forecast, sending its shares down more than 5pc yesterday.

The company’s thirdquarter trading update confirmed that its debts would outstrip expectations in 2018 and that it would have to slash its borrowing levels next year. Shares fell 5.6pc to end the day at 33.04p, a 37-year low.

Debt is now predicted to be in a range of £625m to £650m this year, compared to a forecast of £575m to £600m.

Its UK construction arm is now set to report a loss in the second half of the year, according to the company, while its international order book was also “lower than expected”.

An energy-from-waste venture that has proven more costly than expected continues to weigh on the company. Additional delays resulted in penalties that will dent its cash inflows by £15m more than expected in the summer.

Interserve, one of the world’s largest private contractors with 74,000 staff, pulled off a £300m refinancing earlier this year, having come close to breaching loan terms with its banks.

It has been under close scrutiny as a government supplier following the collapse of fellow outsourcing firm Carillion in January. Earlier this month its shares crashed for two days in a row and it fought to play down fears it was in trouble.

Interserve also provides catering, cleaning and building maintenance services.

Debbie White, the chief executive, said that the business “had traded robustly in some challenging markets”.