Interserve, the UK’s largest public service provider, has reached a deal with creditors, amid concerns the company could be the next Carillion.
The rescue plan includes reducing debt to £275m, by issuing new shares worth £480m in a debt-for-equity swap. Interserve said the new shares would account for 97.5% of the firm's share capital.
Interserve, a major government contractor, has a wide range of services from construction and dredging to healthcare and catering. Government contracts currently make up 70% of Interserve’s £3.2bn turnover.
The firm’s most profitable arm, RMD Kwikform, a supplier to the construction industry, will remain as part of the Interserve Group but banks will have £350m of debt secured against the division. The firm had previously considered spinning RMDK off to lenders to raise money.
Debbie White, chief executive of Interserve, said the deal marked a significant step forward in the firm’s plans to strengthen the balance sheet.
She continued: “The board believes that this agreement will secure a strong future for Interserve.”
This is the second rescue faced by Interserve within a year, and concerns raised about the firm's position late last year caused company shares to drop by 70%.
The firm, which employs 75,000 people worldwide, now has a market value of £17m, compared to £500m two years ago.
Speaking to the Public Accounts Committee in December 2018, John Manzoni, chief executive at the Cabinet Office, said Interserve’s situation was “very different” to the collapse of Carillion.
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