Interserve soars after outsourcer inks refinancing agreement
Fears had been mounting for the group, which holds several government contracts and employs 80,000 people.
Shares in Interserve surged after the outsourcer received a lifeline from its lenders that will put the troubled firm on a more secure financial footing.
The refinancing deal will see Interserve receive a £196.6 million cash injection and £95 million in bonds following talks with its banks, which include HSBC, Lloyds, RBS and Barclays.
Fears had been mounting for the group, which holds several government contracts and employs 80,000 people, as the fallout from the collapse of Carillion threatened to engulf the sector.
It is responsible for British military bases in Gibraltar and the Falklands and holds several contracts with local authorities, the London Underground and for Whitehall offices.
Interserve was hit by disappointing trading in July and August, and in October warned over profits and a potential breach of its banking covenants as it grappled with escalating staff costs, squeezed margins and a flagging performance from its justice business.
Debbie White, Interserve’s chief executive, said: “Today’s announcement is a significant milestone for Interserve and a major step in securing a firm financial platform to underpin the Group’s future.
“We are encouraged by the support from our lenders in respect of these new facilities, which will allow the new management team to execute our business plan, focused on delivering a great service for customers, driving growth and restoring value.”
Shares surged 25.75% to 87.9p shortly before market close.
Interserve added that its total debt pile will stand at £834 million once the refinancing is complete.
Despite flagging financial troubles towards the end of last year, Interserve has landed a number of hefty wins, including an extension on facility management services at the BBC worth £140 million and a £227 million Government contract to provide similar services for the Department for Work and Pensions.