UK: Construction and facilities management firm Interserve says it is in constructive discussions with lenders on a deleveraging plan as it struggles with over £600m of debt.
As concern grows regarding the future of the company, amid worries that it could be another Carillion, Interserve says it intends to announce its finalised deleveraging plan, which would be subject to shareholder approval, in early 2019.
While Interserve maintains that it continues to trade well and in line with its expectations for the year ending 31 December 2018, it reveals that the deleveraging plan would deliver a strong balance sheet with Interserve targeting leverage of approximately 1.5x net debt/EBITDA. These discussions also involve proposals to amend the group’s current financing agreements, including the extension of the maturity dates and repayment profiles of the existing facilities.
The deleveraging plan is also likely to involve the conversion of a substantial proportion of the group’s external borrowings into new equity, an element of which may be sold to existing shareholders and potentially other investors. If implemented in this form, the deleveraging plan could result in material dilution for current Interserve shareholders.
“Our lenders are supportive of the deleveraging plan which will underpin the long term future of Interserve,” said Interserve CEO Debbie White. “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. Our discussions with our lenders are a positive step in the process that was agreed as part of the April refinancing.
“The fundamentals of our business remain strong. The deleveraging plan will give Interserve a strong long term capital structure and provide a solid foundation on which to build the future success of the Group.”