Deal cuts debt
Interserve reaches rescue agreement with creditors
The company sells services, including probation, cleaning and healthcare, and is involved in construction projects. Until last summer it was a big stakeholder in the Haymarket office development in Edinburgh.
The rescue plan involves cutting its debts from over £600m to £275m by issuing £480m of new shares and transferring £350m of existing debt to Interserve’s RMD Kwikform business.
Under the deal, existing shareholders will be all but wiped out with the new shares accounting for 97.5% of the enlarged Interserve stock.
Existing lenders, including RBS, HSBC and BNP Paribas, will provide an additional £75m of new liquidity through the provision of a new debt facility with a maturity of 2022.
Following the announcement, an existing shareholder has called for eight directors to be removed from the company’s board.
Interserve has a market value of £17m, down from £500m in 2017, and a turnover of £3.2bn. About 70% of Interserve’s turnover comes from government contracts.
Debbie White, CEO, pictured, 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.
“The board believes that this agreement will secure a strong future for Interserve. This proposal has been achieved following a long period of intensive negotiation and has the support of our financial stakeholders and Government. Its successful implementation is critical to the Interserve Group’s future and all of its stakeholders.
“The Deleveraging 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 the Interserve Group’s employees, customers and suppliers.”