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Interserve job cuts loom as pub founder buys debt

Interserve could cut up to 1,000 jobs worldwide this year as part of its turnaround efforts, which have received a fresh boost after a new investor purchased up to a third of company’s debt.

Construction News understands that the company is still reviewing its restructuring plans for 2018 and the number of job cuts has not been finalised.

However, it could eventually be as high as the figure of 1,000 reported by the Financial Times 

The company, which employs 25,000 people in the UK and 80,000 worldwide, cut 500 administrative jobs in the final quarter of 2017.

The restructuring is part of the company’s Fit for Growth turnaround plan, instigated by chief executive Debbie White as part of efforts to reduce costs and boost profitability at the firm, which is weighed down by £513m of net debt.

As part of Fit for Growth, Interserve has started disposing of non-core assets and last month announced it would wrap up its UK power business.

The company is currently attempting to agree new long-term financing arrangements with its lenders ahead of a deferred testing of its banking covenants set for the end of this month.

Over the weekend its business case received a boost when it emerged that the founder of pub chain Punch Taverns had bought up to a third of the company’s debt.

The Telegraph reported that Alan McIntosh’s Emerald Investments firm has bought tens of millions of pounds of Interserve’s debt since the start of the year on the secondary market, as lenders including Barclays and Lloyds sell out of their positions for as little as 50p in the pound.

Emerald Investments said: “Interserve is a compelling business with a strong management team and clear strategy.

“We look forward to working closely with the company’s management team and key stakeholders to support future growth in the business.”

Last December Interserve managed to secure £180m of short-term funding at the same time as it agreed to push back the testing of its covenants.

However, the company has been hit by market unease following Carillion’s collapse on 15 January, with its share price having halved from 120p in the subsequent weeks.

Last week it rejected a report that it was struggling to put new long-term financing arrangements in place.

An Interserve spokesperson said: “Discussions remain positive, are proceeding to our planned timeframe and we remain confident of reaching a positive outcome.”

Interserve’s shares were up 7 per cent by mid-morning to 59p.

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