Interserve is looking at “immediate” cost cuts and selling off some of its smaller business units as the trouble-hit firm aims to shore up its balance sheet.
The news sent its share price tumbling to an all-time low of 59p, before recovering slightly.
Speaking to analysts, chief executive Debbie White (pictured) said “immediate cost reduction” was the priority as part of a turnaround plan.
“The overhead cost base here is not where it should be from a market competitiveness perspective – that is our immediate area of attack,” she said.
Ms White, who took the reins at Interserve from Adrian Ringrose last month, said it was also looking at the “potential disposal of small business units” across its various divisions.
However, despite potential sell-offs, Ms White said her aim was to keep Interserve operating as a single “whole” entity.
She said the review of the business – dubbed ‘Fit for Growth’ – included assessing the firm’s operational side, as well as financial elements.
Interserve’s woes have been driven by problem energy-from-waste contracts.
Today the company said it was setting aside an extra £35m provision due to project delays, on top of a previous £160m provision for 2016.
Ms White admitted that EfW contracts were a “complex” area, as they involved “significant assumptions around the timing and completion of projects”.
She added: “We want to ensure we have complete transparency and visibility on all of those contracts which contain some issues.”
Interserve said it was also reviewing all its construction and support services contracts.
On construction, Ms White flagged that markets in different regions of the UK “vary enormously” in terms of contracts available and their profitability.
“What we are looking at is the regional dispersion and how we can employ our capability to the best possible effect,” she said.
Interserve said discussions with lenders were “ongoing” and confirmed today it has taken on PwC to help these discussions.
Chief financial officer Mark Whiteling, who joined Interserve this month, told analysts the firm was in the “early stages” of negotiations with its banks, but that they were being “very supportive so far”.
Interserve’s problems have sparked comparisons to crisis-hit Carillion. However, Liberum analyst Joe Brent told Construction News earlier this week he believed Interserve is “much better placed to weather its difficulties”.