Interserve agrees debt reduction plan

6 February 2019

Interserve has agreed a plan with its lenders that will see it reduce its net debt to from around £650m to £275m by issuing £480m of new equity to its creditors.

A total of £350m of existing debt will be allocated to Interserve’s profit-making RMD Kwikform arm, which will remain part of the group. The maturity of the debt will be extended to 2023.

Existing lenders will also provide an additional £75m of new liquidity to Interserve through the provision of a new debt facility with a maturity of 2022.

The deal leaves lenders with control of 97.5% of the company and the finalised plan is expected to be launched within the next few weeks, subject to approval from Interserve’s shareholders.

Commenting on the deal, chief executive Debbie White said: "Agreeing the key commercial terms of the Deleveraging Plan with our lenders, bonding providers and pension trustee is a significant step forward in our plans to strengthen the balance sheet. The board believes that this agreement will secure a strong future for Interserve.  This proposal has been achieved following a long period of intensive negotiation and has the support of our financial stakeholders and government.  Its successful implementation is critical to the Interserve Group's future and all of its stakeholders.

“The Deleveraging Plan will, alongside our 'Fit for Growth' transformation programme, place us in a strong position to deliver our strategy, be competitive in the marketplace and provide a secure future for the Interserve Group's employees, customers and suppliers."

Meanwhile, one of Interserve’s major shareholders, Coltrane Master Fund, has called for eight of the company’s directors to be removed.

In a ‘requisition notice’, the company said it wanted to see the removal of chairman Glyn Barker, chief financial officer Mark Whiteling, executive director Dougie Sutherland, and non-executive directors Russell King, Anne Fahy, Nick Salmon, Gareth Edwards, and Nicholas Pollard.

However, it continues to support White in her role as chief executive.

It also proposed the appointment of David C.L. Frauman, managing director of Steinhoff Finance Holding, and Stuart Ross as directors.

Interserve said it was consulting with its advisers and will update its shareholders about the timing of its general meeting to consider the matters “in due course”.

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