Written by: Keith Tully
Reviewed: Tuesday 19th March, 2019
The support services and construction sector outsourcing giant Interserve is telling staff and subcontractors that its main businesses will be operating as normal despite a pre-pack administration deal having seen it swap owners in recent days.
A debt-for-equity deal intended to rescue the group that owned those businesses before it entered insolvency was rejected by shareholders on March 15th and Interserve subsequently appointed administrators from EY.
Assets owned by Interserve plc were immediately transferred to a new entity, Interserve Group, which has been established by creditors, with the old parent group having now become defunct.
According to EY, the pre-pack administration deal has secured jobs within Interserve’s 68,000-strong workforce while also “ensuring there was no disruption to the vital public services that Interserve provides to the UK government”.
“The transaction has enabled the rest of the Interserve Group to access the required additional £110m of liquidity, as well as implement the debt for equity swap and reduce the indebtedness of the group by some £480m,” an EY spokesperson added.
Debbie White, the Interserve Group’s chief executive, has said that the recently done deal gives her operation a “stronger financial platform” that will enable it to deliver value to customers going forward.
“Interserve is fundamentally a strong business and with a competitive financial platform in place we see significant opportunities ahead as a best-in-class partner to the public and private sector,” she said in a statement.
In recent weeks and months there have been concerns that Interserve would suffer a similar fate as that which befell Carillion, the facilities management and construction sector outsourcing giant that collapsed into insolvency and liquidation in early 2018.
Despite continuing to operate, having entered administration, there are lingering fears that Interserve’s situation will eventually lead to a significant number of job losses and leave large numbers of contractors out of pocket.
The collapse and liquidation of Carillion last year led to a notable increase in the number of corporate insolvency cases with the UK’s construction sector as a significant number of its suppliers were left unpaid.
Interserve Group subsidiaries have operations covering everything from large-scale civil engineering projects to healthcare staffing and from property development initiatives to the provision of IT hygiene services.
Annual revenues across the group are worth in excess of £2 billion and it has around 45,000 employees in the UK.