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Interserve says finances on track amid speculation of 'another Carillion'


Interserve has insisted that its finances are on track despite a former shareholder casting doubt on its future and warning the firm could face a similar fate as collapsed outsourcing rival Carillion.

The company issued a statement on Tuesday in an effort to quell concerns that caused its share price to plunge about 20% by midday.

Shares fell 10% on Monday, following an update from joint venture partner Renewi that said Interserve had missed a key construction deadline for an waste-to-energy facility in Derby.

The news prompted speculation that Interserve may be forced to set aside more cash to compensate for delays and issue a spate of new shares to raise funds.

“Interserve confirms that the implementation of the Group’s strategy and the fit for growth transformation programme remains on track and the Group continues to expect a significant operating profit improvement in 2018, in line with management’s expectations,” the company said in a market statement on Tuesday.

The comments helped revive Interserve shares, which closed down about 2% but still hovering near their lowest level since 1985.

The statement came as a former shareholder raised the prospect of an imminent collapse. “We could be looking at another Carillion. I don’t see how they can raise the £500m or so needed,” the anonymous shareholder told the BBC.

“The management team and its track record is not good enough to make a case for investing new money,” he added, saying that the funds were unlikely to be raised “unless something weird happens from left field, like government providing direct financial support”.

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But the BBC also cited two additional unnamed sources close to the company denying that it was nearing bankruptcy.

An Interserve spokesperson declined to comment.

Carillion’s catastrophic collapse in January raised wider questions about the state of the outsourcing industry, as the stretched firm was found to be bidding for contracts with ever narrower margins in a bid to stay competitive.

The failed firm went into liquidation with just £29m in the bank.

Interserve, which also provides cleaning services for schools, hospitals and government departments across the UK, was forced to strike a rescue deal worth £300m back in March.

A potential penalty on the back of delays in Darby could still dent the company’s finances.

A spokesperson for Interserve said earlier this week that the firm “continues to make progress” on the energy-from-waste project and that the plant was already operational and receiving waste.

“We continue to commission the plant in readiness for handover,” a spokesperson said.

The Derby facility has been plagued by delays but aims to convert waste to electricity that could power as many as 14,000 homes.



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