Interserve enters new round of rescue talks

Interserve has entered rescue talks which could see creditors take control of the company.

According to the Financial Times, a proposed deal would see holders of Interserve’s £650m debt take a heavy loss on their existing exposure to the contractor as part of a debt-for-equity swap.

The value of existing shares would be almost wiped out. 

The £3.2bn turnover firm could then seek to raise cash through a new share-offering, or become private. It is also hoping to sell one of its Middle East businesses.

Interserve has reached its lowest share price in 34 years this month, with the group’s stock closing at 25p on Friday – a price that is expected to take another hit in Monday trading.

This would be the contractor’s second refinancing this year, after it wrapped up a £300m deal in March.

But things have not improved for the contractor as it struggles to complete problem jobs including four energy-from-waste contracts and a central London scheme that is running 10 months behind schedule.

Subcontractors have been told to secure funding when working for Interserve, while the Cabinet Office has already asked it to draw up a living will – in case it goes under.

A spokesperson for the contractor said: “As previously announced, Interserve is working with its advisers to look at all options to deliver the optimum capital structure for the business to support its long-term, sustainable development.

“This includes options to bring new capital into the business and progressing the disposal of non-core businesses. The fundamentals of the business are strong and the Board is focused on ensuring Interserve has the right financial structure to support its future success.”