Interserve share price plummets as it admits rescue refinancing plan

Interserve's shares more than halved today after the outsourcer confirmed it was in rescue refinancing talks with lenders as it battles a £650m debt pile.

The embattled public sector outsourcing giant admitted at the weekend it was “engaged in constructive discussions regarding the agreement and implementation of a deleveraging plan”, causing a 53 per cent drop.

Interserve said talks involved proposals to “amend the group’s current financing agreements, including the extension of the maturity dates and repayment profiles of the existing facilities”.

Workers at the NHS and the Foreign Office are among Interserve’s 45,000 UK employees, and most of its annual £3.2bn turnover comes from the government.

Debbie White, chief executive of Interserve, said lenders were supportive of the deleveraging plan, but it would not be announced until the new year.

“Our refinancing in April of this year contemplated the development of a deleveraging plan in consultation with our stakeholders and the liquidity injected at that point also gave us the funding to execute our business plan,” she said.

“Our discussions with our lenders are a positive step in the process that was agreed as part of the April refinancing. The Cabinet Office has also expressed full support for the work we are doing to implement our long term recovery plan.”

The company employs around 75,000 staff globally and provides construction, waste management and cleaning services for both private and public clients.

Whitehall assured last week it did “not believe that any strategic supplier is in a similar situation to Carillion,” which caused shockwaves among outsourcers when it collapsed in January after succumbing to nearly £7bn of debt.

But analysts today were quick to compare the two. Russ Mould, analyst at AJ Bell said: “Almost a year since the increasing intractability of Carillion’s problems became apparent, its peer Interserve appears to be losing the confidence of investors at pace.”

He said the company faced “the same toxic mix of loss-making contracts and unsustainable borrowings” as Carillion.

Jon Trickett, Labour's shadow minister for the Cabinet Office, called for a temporary ban on the company from winning public contracts, a demand which was echoed yesterday by trade unions GMB and Unite.

A Cabinet Office spokesperson said the department was monitoring Interserve’s health, and was in “regular discussions” with its management. “We fully support them in their long-term recovery plan,” they added.