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Interserve: Minister quizzed on payment and survival

Business secretary Greg Clark has refused to be drawn on questions regarding Interserve’s financial health and payment to subcontractors.

The minister was asked by Labour MP James Frith to give assurances that the firm “would not go the way of Carillion” in the House of Commons yesterday.

Mr Frith also asked Mr Clark if he would “commit to press Interserve to make sure subcontractors are paid up to date and are not at risk of carrying the can for another outsourcing collapse?”

In response, the business secretary said there was nothing “further report” in relation to the contractor.

He added: “Prompt payment is very important for businesses large and small, and supply chains rely on that.

“My colleagues across the government and in the Cabinet Office have close relationships with all the suppliers to the government so that we can be aware of the prospects.”

Last week, Interserve’s share price reached an all-time low amid reports the company was preparing to ask investors for more cash.

The BBC reported that the contractor was preparing to target new investors to raise additional capital.

The broadcaster quoted one unnamed former large shareholder who said Interserve could be “another Carillion” after its shares fell more than 12 per cent last Monday.

They also told the BBC they doubted Interserve could attract cash from new investors, with its net debt forecast to stand at £575m-£600m at the end of the year.

Interserve released a market statement following the BBC report, although it stopped short of addressing the speculation about its need for fresh capital.

The contractor stated instead that its Fit for Growth turnaround plan was “on track” to deliver improved profitability “in line with management’s expectations”.

In response to the Commons exchange an Interserve spokesperson said: ”We are committed to improving our performance on payment term measures and are currently working in partnership with our construction supply chain to ensure this improvement is realised, in both the short term and medium term.

”We have a strong and loyal supply chain who we continue to work with collaboratively achieving many great outcomes for our customers.

 

 

 

Readers' comments (1)

  • The company has been in a parlous state for over a year. One thing is for certain the Cabinet Office will be putting the screws on various Public Sector bodies not to pull the plug on Interserve just like they did with Carillion and more recently Capita. In some cases these actions cause more problems in terms of cost and delays in the longer term than they solve. The real problems lie with poor contracting and selection processes and controls on both the client and contractor sides.

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