Interserve client Viridor mitigates against bigger hit on energy from waste plant

Interserve client Viridor has increased the provision on its £72m claim against the firm, after delays and issues with the building of a Glasgow waste-to-energy plant.

Viridor’s parent company Pennon today said after monitoring Interserve’s financial position in recent months, it had doubled the provision from £8m to £16m.

The claim is against Interserve’s construction division, which remained solvent while its parent company Interserve Plc went into administration earlier this month after shareholders voted down a rescue deal designed to relieve it of a £630m debt pile.

The move indicates Pennon fears taking a bigger hit on the plant than it originally thought.

Interserve’s foray into building energy from waste (EfW) plants has plagued the contractor since 2016 and cost it more than £220m.

EfW plants are a more eco-friendly way to dispose of standard municipal waste than landfill sites, the latter being a practice the Scottish government is keen to phase out by 2021.

“Given the recent announcements regarding Interserve plc entering into administration we are seeking further clarification regarding the financial position of Interserve Construction Limited the ongoing operating company with whom we contracted, which may change the level of provision to be announced with the full year 2018/19 results on 30 May 2019,” said Pennon in a trading update.

“We will continue to pursue recovery of all amounts due from the operating subsidiary Interserve Construction Limited and will take all the necessary legal and procedural steps to achieve this.”

Interserve last week embarked on a new chapter as a private company, as its shares were removed from the London Stock Exchange after the administration. Its share value had plummeted nearly 95 per cent in the last year from a high of 117p to 6p when stocks were suspended on Friday.