But analysts play down fears over firm鈥檚 future
Analysts have played down worries over Interserve after morning reports linked the business with a Cabinet Office financial health check.
The news sent shares tumbling 15% at one stage but they have since recovered to trade at just 4% lower than when the markets opened.
Cenkos analyst Kevin Cammack said the volatility underlined how other quoted firms were being affected by the collapse.
鈥淢organ Sindall put out a statement to say it wouldn鈥檛 be impacted and its shares were off 6.5%. I think there鈥檚 a sentiment-driven reaction that it must be bad for you as well,鈥� he said. 鈥淭here is guilt by association. If you鈥檙e anything to do with Carillion or look like it, it must make you somewhat tainted.鈥�
He said Interserve, which yesterday announced a deal with a Spanish airport operator to provide assistance for passengers around terminals, was not in the same boat as Carillion but admitted: 鈥淚nterserve is not in a great place although it鈥檚 a more defendable position. It is a more manageable position on many levels. They have a new management team in place and some tangible business assets which can be sold.鈥�
But he added: 鈥淲hat鈥檚 happened [to Carillion] is not going to make their task any easier. I think the banks will ask for a higher risk premium now [ahead of a refinancing deal].鈥�
And analyst Neil Wilson of ETX Capital said: 鈥淚nterserve has had its problems for sure but it鈥檚 no Carillion.鈥�
In a note on the firm, he added: 鈥淐arillion was facing oblivion as its market cap declined to just 拢61m against liabilities of around 拢1.5bn.鈥�
Interserve has been forced to issue a string of warnings about its energy-from-waste (EfW) business since problems first emerged 18 months ago and led to the departure of former chief executive Adrian Ringrose last year.
The cost of getting out of the business has ballooned to 拢195m 鈥� although in its latest trading update issued last week the firm cheered investors when it said it hadn鈥檛 taken any more hits on the five jobs it is still due to complete.
These include its schemes at Glasgow and Derby which use the complex gasification technology to turn rubbish into energy.
In last week鈥檚 update the firm, which struck a 拢180m refinancing deal just before Christmas and an agreement with lenders to defer loan repayments until the end of March, said net debt last year stood at 拢513m and would climb even higher in the first half of this year.
A Cabinet Office spokesperson said: 鈥淲e monitor the financial health of all of our strategic suppliers, including Interserve. We do not believe that any of our strategic suppliers are in a comparable position to Carillion.鈥�
No comments yet