Shares in outsourcer Interserve (IRV) have been pummelled as concerns have mounted about the its future. The share price tumble began when the market got wind of fresh problems at an energy-from-waste scheme in Derby, revealed in the half-year results of joint-venture partner Renewi (RWI). The sell-off has also been fuelled by reports that the outsourcer has not stuck to agreed payment terms on the significant majority of its recent bills, and that some suppliers and contractors will no longer take its business. Speculation of a rescue rights issue saw the shares hit 30p on 13 November, compared with a 45p close at the end of the previous week, before a statement from the company helped a sharp bounce back to 37p at the time of writing.
The company agreed a rescue financing package with banks in March, but there are fears this will be insufficient. The situation looked perilous at the time of the half-year results, with a £112m year-on-year increase in net debt to £614m (more than 10 times the current market capitalisation) and a £109m operating cash outflow reported. Interest costs have shot up, with an £80m net financing charge (about £30m more than the market cap) expected for the full year, although not all of this will be cash payments.
