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Interserve debts driven to £650m by fresh EfW costs

Interserve’s net debt has jumped more than expected and could hit £650m by the end of 2018, which the company blamed on further energy-from-waste losses and slow payments in the Middle East.

In a trading update released this morning, the company revealed year-end net debt would now be between £625m and £650m.

Interserve had previously told the market in August that net debt would be in £575m-£600m range at the end of 2018

Today’s announcement also saw the company commit to a deleveraging plan in early 2019 to address its debt pile.

The company is speaking with advisers on how to recapitalise the business, which it said could include securing new investors to inject fresh funds alongside its ongoing sale of non-core assets.

Interserve’s shares plummeted last week on the back of speculation that it would soon be forced to look for extra capital from new investors to continue trading.

Net debt was pushed higher in the third quarter after Interserve was hit by fresh penalty payments for further delays on its remaining EfW projects.

The company said an increase in receivables in the Middle East had also reduced the expected cash balance and driven up net debt.

Chief executive Debbie White said: “The board remains focused on positioning the group for long-term, sustainable success.

“This means continuing the operational progress we are making to put legacy issues behind us, particularly in closing out and exiting the energy-from-waste business.

“It also means reducing debt and putting a strong long-term capital structure in place. To this end we will announce a deleveraging plan for the group early in 2019.”

Interserve has been rocked by huge losses on EfW projects in recent years.

It said today that it had completed construction on its four remaining projects, although they have not been handed over yet.

The company added that it still expected to benefit from insurance claims related to the projects next year. 

“The receipt of further insurance incomes remains a key focus for the group,” its update said.

Aside from the EfW projects, Ms White said the company had “traded robustly” in the third quarter, although the UK construction business is expected to report a “small loss” in the second half of 2018.

Ms White added that the company’s Fit for Growth turnaround programme was delivering savings and overall performance would be “significantly improved” on 2017, when it made a £244m pre-tax loss.

Intserve’s share price was down 8.2 per cent in early trading.

  • Interserve debts driven to £650m by fresh EfW costs

    Interserve debts driven to £650m by fresh EfW costs

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