Interserve’s (IRV) full-year results for 2018 are largely irrelevant to its prospects as a going concern. The beleaguered outsourcer has a debt pile close to 20 times larger than its current market capitalisation, and urgently needs shareholders to approve its proposed deleveraging plan so it can avoid a default.
The problem is, the plan the lenders are offering would all but wipe out the holdings – such as they are – of existing investors. The latest deleveraging plan includes a massive debt-for-equity swap and open offer of more than 2.8bn new shares. It would leave the current shareholders with just 5 per cent of the total issued share capital, itself an improvement on the 2.5 per cent previously offered.
Reports from the Financial Times following the announcement claimed sources close to Coltrane Asset Management – the most significant current shareholder – were dismissive of the improved deal. The deal would significantly reduce the company’s debt, cutting it to £350m, which would be secured against equipment services division RMD Kwikform and non-recourse to the rest of the group. RMD Kwikform is widely considered the highest quality part of the business, with pre-tax margins of 20 per cent in 2018, compared with respective rates of 1.5 per cent and 3.3 per cent for the construction and support services divisions.
| INTERSERVE (IRV) | ||||
| ORD PRICE: | 22p | MARKET VALUE: | £ 33m | |
| TOUCH: | 21.7-22.5p | 12-MONTH HIGH: | 116p | LOW: 6.5p |
| DIVIDEND YIELD: | NIL | PE RATIO: | NA | |
| NET ASSET VALUE: | * | NET DEBT: | £631m | |
| Year to 31 Dec | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2014 | 2.91 | 61.9 | 32.2 | 23.0 |
| 2015 | 3.20 | 79.5 | 47.5 | 24.3 |
| 2016 | 3.69 | -94.1 | -71.2 | 8.1 |
| 2017 | 3.67 | -244 | -176 | nil |
| 2018 | 3.23 | -111 | -89.2 | nil |
| % change | -12 | - | - | - |
| Ex-div: | na | |||
| Payment: | na | |||
| *Negative shareholder funds | ||||
