Interserve (IRV) is close to agreeing on a plan with its creditors, which would rescue the outsourcer from its mountainous debt pile.
Under the plan, net debt would reduce to around £275m, from the current £625m-£650m level through the issue of £480m of new equity – provisionally placed with existing lenders, but subject to clawback by shareholders. The new placing would account for 97.5 per cent of the group’s ordinary shareholder capital.
The remaining debt, however, would be split unevenly across the company – £350m of debt will be secured solely against RMD Kwikform, the equipment services division widely regarded as the strongest part of Interserve, while the rest of the group will have a pro-forma cash position of £60m.
Shares in the group tanked in December after management announced its de-leveraging plan was likely to include a sizeable debt-for-equity component, causing dilution for shareholders. Conversely, the details of the program have been well-received, with investors sending the share price up a tenth in early trading. With the shares at 14p, the deal remains subject to shareholder approval.
Alongside the de-leveraging plan, Interserve also announced that its largest shareholder, Coltrane Asset Management, had requisitioned a general meeting to propose the removal of the entire board of directors, except for chief executive Debbie White, along with the nomination of two replacements.
