Interserve PLC (LON:IRV) shares dropped after the construction and support services group confirmed it was in talks with its lenders in the wake of a profit warning.
The company said its lenders, including HSBC Holdings PLC (LON:HSBA) and Royal Bank of Scotland Group PLC (LON:RBS), hired EY as an adviser last week.
"Work is underway to provide greater clarity on Interserve's current trading and energy from waste provision, provided in the 14 September update announcement," the company said.
The news follows Interserve’s September announcement that trading in July and August had been “disappointing” and the cost to exit its waste management business would “significantly exceed” the £160mln previously anticipated.
The group blamed economic uncertainty and weak government spending for the profit warning, which cut its market value by halve.
Sky News reported on Sunday that it was in discussions with its lenders amid mounting concerns about its financial state. Lenders have become increasingly worried about Interserve’s balance sheet despite saying it should be able operate within its banking covenants for this year, Sky News said, citing sources.
Interserve confirmed that it was in “constructive and ongoing” talks with its lenders in a statement today, adding that it expects to provide an update in coming days.
The group’s contracts include managing the Salisbury Plain military training base for the Ministry of Defence, a construction project at Durham University and support for the UK armed forces in Cyprus, Gibraltar and the Falkland Islands.
Shares fell 4.29% to 106p around midday trading.