Financial lifeline for construction and services group Interserve
Shares in Interserve have surged after the major outsourcing group received a lifeline from its lenders that will put the troubled firm on a more secure financial footing.
The refinancing deal will see Interserve eceive 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 building and services 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 employs around 800 across the Black Country, including staff at offices in Dudley, 600 working on cleaning and maintenance at Russells Hall Hospital and 120 at specialist construction firm RMD Kwikform in Aldridge.
It also built the £70 million Hadley Learning Community in Telford and continues to provide maintenance services for the 39 acre site.
Around 1,600 more staff from former offices in West Bromwich and in Birmingham have recently moved into a newly built regional headquarters, the landmark Ingenuity House building near Birmingham Airport.
Interserve is also 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 on Wednesday night after the announcement. Today in early trading they were up another seven per cent.
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.
