Interserve in rescue talks

Interserve one of the biggest outsourcing companies serving the government is in rescue talks  that could see Carillion-style collapse if it fails.

Interserve plc is multinational support services and construction company based in UK  was founded in 1884 as the London and Tilbury Lighterage Company Limited and retained the Tilbury name until 2001 when it rebranded as Interserve plc.

Interserve is seeking to restructure finances for the second time this year. A new package for Interserve which employs over 45, 000 people in the UK delivering key services such as schools and hospitals has gained urgency as clients start to retreat from awarding fresh contracts, suppliers and workers demanding payment upfront.

Banks after bitten in the past are wary of lending to the sector which is vital to many public services. Carillion whose failure in January 2018, left investors, pensioners and workers incurring heft losses and the government struggling to deliver key services.

Interserve constructs, maintains buildings and provide strings of vital services from nursing in people’s homes to managing probation for the Ministry of Justice and facilities management.

Their turnover is £3.2m and seventy percent of that comes from the government.

Under the present terms of the proposed deal, banks and other debt holders would lose on their existing exposure as part of a debt-for-equity swap, while public shareholders would be virtually wiped out. An earlier £834m rescue deal was agreed with the banks in March 2018, but pressure has increased since Interserve said last month that its debts this year would rise to £650m. Its shares have fallen 80 per cent this year, to give it a market capitalisation of £35m, suggesting the business is insufficient to cover existing liabilities.

Interserve which employs 75, 000 people globally hopes to sell a  Middle East business and that together with a debt-for-equity-swap would enable to tap investors.