Interserve & the 'living will'

by Brian Bamford

LAST February, the journalist for Forbes magazine Francis Coppola wrote: 

'Interserve is experiencing severe cash flow problems, mainly due to its waste management business on which it has been taking heavy losses for some time.  In 2016, it decided to exit from this business, and it is now taking on no more work in this sector.  But it is still running down a bunch of contracts on which cash outflows are significantly exceeding inflows.  Seeing these contracts through to completion is raising Interserve’s short-term borrowing requirement, forcing it to seek additional funding from banks.'

  

At that time there were suggestions that INTERSERVE may be another Carillion, which had collapsed in January.  Two days ago it was reported that Interserve has agreed to provide the government with a back-up plan or will to avoid a Carillion style carnage in event of it going under.

On Monday, David Lidington, minister for the Cabinet Office, announced that key government suppliers are being asked to draw up so-called 'living wills' to ensure public services continue without severe interruption after company failure.

It is worth noting that Interserve has offices in Tameside and in Rochdale on Livsey Street, where it manages healthcare appointments. 

Lasr week 'Building magazine' reported:  'Worries that Interserve could be facing more losses on another botched energy-from-waste scheme have sent its stock plummeting 30% since Friday.'

Construction Inquirer is now reporting that faced with the current problems a recent plan from Interserve is expected to include a debt for equity swap or rights issue, although the latter would be a challenge after recent share price falls.

Watch this space!

********