Interserve shares sink as it battles to avoid Carillion’s fate
Danish outsourcer ISS also announces plans to cut 20% of workforce and quit 13 markets
British outsourcer Interserve has thousands of UK government contracts to clean hospitals and serve school meals. Photograph: Peter Nicholls/Reuters
Shares in Interserve lost more than half their value on Monday after the British support services provider said it was in rescue talks which may hand control of the company to creditors in a bid to avoid a Carillion-style collapse.
The British outsourcer, which employs 75,000 worldwide and has thousands of UK government contracts to clean hospitals and serve school meals, said on Sunday it would seek to cut its debt to 1.5 times core earnings in talks with lenders it hopes to complete early next year.
Chief executive Debbie White said the company was trading well and in line with expectations for 2018, and that the debt reduction plan, first floated in a refinancing in April, had government support.
But the moves add to the sense of crisis around the company, whose value has slumped from over a billion pounds in 2014 to just £9.7 million.
Interserve’s combined credit score, which measures on a scale of 100 to 1 how likely a company is to default on its debts in the next year, was “1”, according to Refinitiv Eikon data, indicating it was expected to default.
Sky News reported on Monday that the firm’s creditors had hired Lazard to advise on the terms of a £600 million rescue deal. Lazard and Interserve did not immediately respond to request for comment on the report.
And also on Monday, Danish outsourcing group ISS said it plans to cut its workforce by 100,000 and raise up to $381 million by selling businesses over the next two years, betting that focusing on its biggest clients will boost sales growth.
The move, which will see the Danish firm quit 13 countries, has echoes of the streamlining at several British rivals after acquisition sprees left them struggling to cope with sprawling low-margin businesses.
ISS said it would return about 25 per cent to shareholders via a share buyback or a special dividend. The company said the plan would significantly simplify its business, reducing its customer numbers by 50 per cent and its staff by 20 per cent – to about 390,000 people. – Reuters