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Interserve EfW JV partner gets $248m lifeline

Interserve’s joint venture partner on three UK energy-from-waste projects has secured extra funds as it battles with financial troubles.

US-based energy technology specialist Babcock & Wilcox secured $248.5m (£182.1m) in funds on Tuesday after it issued new shares on the New York Stock Exchange.

The fundraising was required to pay off a $196m (£144.1m) loan B&W took out in March 2017 and to boost its working capital.

B&W’s European subsidiary B&W Volund is in a joint venture with Interserve to deliver EfW plants at Dunbar (pictured), Margam and Rotherham.

Under their arrangement Interserve is only liable for the civil engineering and construction work, while B&W is only liable for the EfW processes work.

However, if one company fails the other becomes liable for all the risk on the project.

Interserve listed B&W’s solvency as a risk in its results for 2017 that were released on Monday.

The company said: “Although noting the signs of financial strain on B&W, the directors of Interserve continue to believe it is an appropriate judgement to assume they will remain a solvent counterparty.”

A spokesman for B&W said the proceeds from the share offering will help it finish work on its UK EfW projects, which it expects to complete by the end of 2018.

B&W’s financial difficulties have stemmed from large losses in its renewable energy division, which includes EfW schemes, over the past two years.

In 2017 the company made a $281.5m (£206.9m) operating loss on revenue of $1.56bn (£1.15bn), which followed a $102.8m (£75.6m) loss in 2016.

Since May 2016 B&W’s shares have dropped almost 90 per cent from $21.75 to around $2.40 today.

B&W has now “elected to limit bidding” for new EfW contracts in Europe until its current workload is complete.

Interserve and B&W secured the three deals to deliver EfW plants in Dunbar, Margam and Rotherham between January and March 2015.

All three were due to be operational by the end of 2017, but delays in completion have contributed to £195.1m in EfW losses at Interserve over the past two years.

In August 2016 Interserve announced it would exit the EfW business.

As of April it still has four projects to complete construction on, which includes a scheme in Templeborough along with the three B&W projects.

Chief executive Debbie White had said she hopes the company can draw a line under its EfW projects by the end of 2018.

Interserve declined to comment on B&W’s share offering.

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