Outsourcer Interserve to issue new shares in bid to cut debt (updated)

Carillion

27/02/2019 09:58

(Adds details on issue, results and background)
    Feb 27 (Reuters) - Troubled British support services
provider Interserve Plc  IRV.L  said on Wednesday it would raise
435.2 million pounds  ($577.77 million) in cash through an issue
of new shares as part of its plan to cut debt and avert a
collapse like Carillion.
    Interserve said earlier this month that it had struck a
rescue deal that would have lenders take control of the company
by swapping millions of pounds worth of debt for new shares,
giving the outsourcing group a chance of survival.  urn:newsml:reuters.com:*:nL3N20119Q
    Separately, Interserve also reported a smaller loss before
tax of 111.3 million pounds for the 12 months ended Dec. 31, but
said Britain's construction market remains volatile because of
the country's impending exit from the European Union and a hit
to construction confidence after the high profile fall of
Carillion.
    "The period (2018 and the first few months of 2019) has been
the most difficult in Interserve's history since the group was
established in 1884," Chairman Glyn Barker said in a statement. 
    "The resulting stress and uncertainty have led to anxiety
amongst our staff, suppliers and customers and significant loss
of value for our shareholders," he added.  
    Barker admitted that the business had lost its operating and
financial discipline, became too federated and inefficient,
lacked a coherent approach and entered some businesses it should
not have done.
    Interserve is one of Britain's biggest outsourcing and
construction companies, delivering contracts including cleaning
hospitals and serving school meals.
    Interserve said the new issue would be priced at 15.3 pence
per new share and 19 new shares for every 1 existing share. The
new shares issued through the placing and open offer will
account for 95 percent of Interserve's share capital. 
    Net debt rose to 631.2 million pounds in 2018, pushed up by
costs from some contracts and projects.  
    Interserve said earlier this month that it would cut debt by
more than half after creditors wrote off loans in return for new
equity. Existing shareholders, who saw the company lose 90
percent of its value in 2018, will largely be wiped out.
 urn:newsml:reuters.com:*:nL3N20119Q
    
($1 = 0.7532 pounds)

 (Reporting by Noor Zainab Hussain in Bengaluru; Editing by
Bernard Orr)
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