Interserve has agreed on the key terms of a rescue deal with its lenders and is still considering a debt-for-equity swap by handing off subsidiary RMD Kwikform to the holders of its debt.
The British business support services provider said on Friday that its rescue plan will see a big part of the company’s £500m debt converted into new equity as it tries to avoid a Carillion-style collapse.
The firm said a portion of new equity will be offered to shareholders and new investors through a public offering, adding “the implementation of the deleveraging plan is not conditional upon a successful public offering”.
Interserve, which employs 75,000 people globally and has thousands of government contracts to clean hospitals and maintain railway stations, also said it would try to cut its debt to 1.5 times core earnings.
The outsourcer's market value plummeted from over £1bn in 2014 to just £16.2m as it struggles under £500m of debt amid a weak construction market – issues that led to Carillion’s collapse in January.
The building materials unit that the company are looking to spin-off, RMD Kwikform, is thought to be worth around £250m and would pay off a large chunk of the debt as it tries to salvage its finances, although the unit's valuation has not yet been confirmed.
Interserve lenders have agreed to defer a payment due under its principal debt facilities to April 30, it confirmed on Friday, with the final form of the plan to cut debt set to be announced in early 2019.