Interserve agrees to key terms of rescue plan (updated)

Carillion

21/12/2018 07:47

(Adds details on plan, context)
    Dec 21 (Reuters) - Interserve  IRV.L  has agreed with its
lenders on the key terms of a rescue plan and is considering
placing its RMD Kwikform unit in a separate holding company
owned by the lenders, the British support services provider said
on Friday.
    The company said this month that it was in rescue talks,
which may hand control of the company to creditors in a bid to
avoid a Carillion-style collapse.  urn:newsml:reuters.com:*:nL3N1YF2VB
    The Reading-based outsourcer, which employs 75,000 globally,
and has thousands of UK government contracts to clean hospitals
and serve school meals, has said it would seek to cut its debt
to 1.5 times core earnings.
    The rescue plan will see a big part of the company's debt
converted into new equity.
    Interserve's market value has slumped from over a billion
pounds in 2014 to just 16.2 million pounds ($20.52 million) as
it struggles with a weak construction market and a heavy debt
load - the same reasons that led to Carillion's  CLLN.L 
collapse in January.
    Sky News reported https://news.sky.com/story/struggling-interserve-may-hand-construction-unit-to-lenders-11581667
 last week that Interserve was looking to hand the 250 million
pounds RMD Kwikform unit, which makes building materials, to its
lenders to try to salvage its finances.
    Interserve, which maintains eight out of 10 of Britain's
busiest railway stations and cleans 2,490 London Underground
carriages every evening, said a portion of new equity will be
offered to shareholders and new investors through a public
offering, adding "the implementation of the deleveraging plan is
not conditional upon a successful public offering".
    Investors took up just 38 percent of British builder Kier
Group's  KIE.L  share issue on Thursday, highlighting tough
times for the construction sector.  urn:newsml:reuters.com:*:nL3N1YP2UM
    Interserve also said on Friday its lenders had agreed to
defer a payment due under its principal debt facilities to April
30.  urn:newsml:reuters.com:*:nRSU2086La
    The final form of the plan to cut debt will be announced in
early 2019, it said.
    ($1 = 0.7895 pounds)

 (Reporting by Noor Zainab Hussain in Bengaluru
Editing by Saumyadeb Chakrabarty)
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