New stock deal will raise 拢435m and leave shareholders with 5% in the troubled contractor
Details have been announced of Interserve鈥檚 revised rescue plan which it hopes will raise around 拢435m to help pay down its debt and restore investor confidence in the struggling contractor.
The firm told the Stock Exchange today it will place 19 new ordinary shares at 15.3p for every existing ordinary share with its main lenders, where every 拢9-worth of stock will be swapped for 拢10-worth of debt.
The 2.8bn new shares will account for 95% of the group鈥檚 total ordinary share capital once the new stock has been issued.
Interserve, whose cash generation foundered via a series of costly energy-from-waste contracts, said the deleveraging proposal was 鈥渃urrently the only plan that is capable of implementation in order to provide sufficient liquidity, cash and bonding facilities to allow the group to service short term obligations and secure a stable platform鈥�.
Under the terms of its plan shareholders will be left with 5% of the group鈥檚 stock, versus the 2.5% mooted previously, although this is still half that proposed by Coltrane Asset Management, the US activist shareholder which recently increased its stake in the contractor to 27% and called for the entire Interserve board, bar chief executive Debbie White (pictured), to be removed.
Interserve鈥檚 RMD Kwikform equipment services business will be ringfenced and 拢350m of the contractor鈥檚 debt will be allocated to it and the group鈥檚 lenders will be providing 拢110m of new cash under what it calls a New Super Senior Facility to improve the firm鈥檚 liquidity. That loan will mature in three years鈥� time.
It will be putting the deal to a general meeting on 15 March, just over a week before another meeting is held on 26 March to discuss the viability of alternative plans being put forward by Coltrane.
In a statement White said the latest proposals were in the best interests of all of the firm鈥檚 stakeholders and the deleveraging plan represented 鈥渁 significant milestone for Interserve鈥�.
She added: The plan provides new liquidity and creates a strong balance sheet, which, alongside our Fit-for-Growth programme, will provide us with a competitive financial structure to continue to improve the business and deliver on our long-term strategy.鈥�
Interserve also announced today that it posted a 拢111m pre-tax loss in 2018, less than half of the group鈥檚 deficit of 拢244m in the previous year. Turnover was down 11% to 拢2.9bn.
Year-end net debt was 拢631m, it added.
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