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| Interserve unveils plan to improve finances and quell 'next Carillion' anxiety | |
| (about 7 hours later) | |
| Government contractor Interserve has unveiled a plan to strengthen its finances and quell anxiety that it could become the next Carillion, a day after construction group Kier completed a fundraising with the same aim. | Government contractor Interserve has unveiled a plan to strengthen its finances and quell anxiety that it could become the next Carillion, a day after construction group Kier completed a fundraising with the same aim. |
| The two companies have become the focus of concern about their debt levels after the high-profile collapse of Carillion led investors and analysts to look for potential weaknesses in other large firms in the construction and outsourcing sectors. | The two companies have become the focus of concern about their debt levels after the high-profile collapse of Carillion led investors and analysts to look for potential weaknesses in other large firms in the construction and outsourcing sectors. |
| A day after Kier raised £250m in a share placing that met with little appetite from City investors although it will allow it to cut debts, Reading-based Interserve fleshed out details of its own deleveraging plan that will hand ownership to lenders. | A day after Kier raised £250m in a share placing that met with little appetite from City investors although it will allow it to cut debts, Reading-based Interserve fleshed out details of its own deleveraging plan that will hand ownership to lenders. |
| The proposals are designed to prop up the finances of a struggling company that employs 75,000 people, including 45,000 in the UK, and has thousands of government contracts such as cleaning hospitals and serving school meals. | The proposals are designed to prop up the finances of a struggling company that employs 75,000 people, including 45,000 in the UK, and has thousands of government contracts such as cleaning hospitals and serving school meals. |
| The company said it would convert some of its debt into new equity, if it can secure lenders’ consent, with some of the stock going to existing investors and the rest offered more widely. | The company said it would convert some of its debt into new equity, if it can secure lenders’ consent, with some of the stock going to existing investors and the rest offered more widely. |
| Interserve said it would also weigh up proposals from some of its lenders to hive off its profitable building materials business, RMD Kwiform, with the banks taking ownership. | Interserve said it would also weigh up proposals from some of its lenders to hive off its profitable building materials business, RMD Kwiform, with the banks taking ownership. |
| A final plan, subject to agreement from groups including lenders, shareholders and pension trustees, will be announced in early 2019, the company said. | A final plan, subject to agreement from groups including lenders, shareholders and pension trustees, will be announced in early 2019, the company said. |
| Chief executive, Debbie White, said: “This progress on the deleveraging plan is excellent news for all our employees, customers and suppliers. | Chief executive, Debbie White, said: “This progress on the deleveraging plan is excellent news for all our employees, customers and suppliers. |
| “It will provide us with a strong balance sheet and enable us to move forward with confidence and the ability to improve our business and deliver our long-term strategy.” | “It will provide us with a strong balance sheet and enable us to move forward with confidence and the ability to improve our business and deliver our long-term strategy.” |
| Shares in Interserve lost almost half their value earlier this month after the company first revealed a deleveraging plan. | Shares in Interserve lost almost half their value earlier this month after the company first revealed a deleveraging plan. |
| The slump forced the government to address comparisons between Interserve and Carillion, insisting that the situation was not as perilous. | The slump forced the government to address comparisons between Interserve and Carillion, insisting that the situation was not as perilous. |
| The Cabinet Office said: “We do not believe that any of our strategic suppliers are in a comparable position to Carillion. | The Cabinet Office said: “We do not believe that any of our strategic suppliers are in a comparable position to Carillion. |
| “We monitor the financial health of all of our strategic suppliers, including Interserve, and have regular discussions with the company’s management. | “We monitor the financial health of all of our strategic suppliers, including Interserve, and have regular discussions with the company’s management. |
| “The company successfully raised new debt facilities earlier this year and we fully support them in their long-term recovery plan.” | “The company successfully raised new debt facilities earlier this year and we fully support them in their long-term recovery plan.” |
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