Interserve hires consultancy firm that advised Monarch on failed strategy

 
Oliver Gill
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Interserve shares jumped over 16 per cent on Friday after securing a £227m deal to service Department for Work and Pensions buildings (Source: Interserve)

The international consulting giant that advised bust airline Monarch on a failed strategy to revamp into a long-haul carrier has been drafted in to help save troubled contractor Interserve.

Oliver Wyman has been hired by Interserve to overhaul operations, according to reports by the Sunday Times.

The cleaning-to-building group is grappling with poor trading, spiralling costs and the prospect of breaching banking arrangements.

Battle lines have already been drawn on a debt restructuring with a lending group that includes HSBC and Royal Bank of Scotland appointing accountants EY as advisers. Interserve has called on the services of Big Four rival PwC to assist in talks with its lenders.

Read more: Carillion conqueror hedgie sets sights on rival Interserve

Part of the US behemoth Marsh & McLennan, Oliver Wyman was engaged by Monarch to arrest a stuttering performance that had plagued the airline since Greybull Capital bought it for £1 in October 2014.

The consulting firm’s “Plan A” is understood to have been for Monarch to morph into a long-haul carrier and sell-off its short-haul routes that generated wafer-thin margins.

But negotiations with the government and airline regulators were called to a halt when Monarch realised such changes were unmanageable, a decision the precipitated the introduction of KPMG to sell the flagging airline.

Boost

Interserve was boosted on Friday by the announcement it had secured a five-year facilities management deal worth £227m with the Department for Work and Pensions. The firm’s shares bounced almost 17 per cent in the wake of the news. Prior to Friday, around 80 per cent of Interserve’s market value had been wiped away since the start of the year.

Hedge funds, which have booked tens of millions of pounds in profits from the failure of Interserve rival Carillion, have turned their attention of the Reading-based firm.

Short-sellers have rushed to borrow the stock in recent weeks to bet against its fortunes. In August less than one per cent of Interserve’s shares were on loan, a figure that has climbed to over 12 per cent at the end of last week, according to IHS Markit.

Oliver Wyman has not responded to a request for comment.

Read more: Interserve shares have now recovered half of their lost ground

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