Interserve PLC (LON:IRV) has agreed on the key terms of a rescue deal with lenders after struggling under a £500mln debt pile.
The UK support services and construction firm said it is also considering placing its building materials business, RMD Kwikform, in a separate holding company owned by the lenders.
The rescue plan will see a large part of the outsourcer’s debt converted into new equity. Interserve has previously said it would seek to cut its debt to 1.5 times core earnings.
Chief executive Debbie White said the deal will provide the company with a strong balance sheet and “enable us to move forward with confidence and the ability to improve our business and deliver our long term strategy”.
A portion of new equity will be offered to shareholders and new investors through a public offering.
But Interserve said “the implementation of the deleveraging plan is not conditional upon a successful public offering”.
Lenders have also agreed to defer a payment due under its debt facilities to April 30.
A final form of the plan to cut debt will be announced in early 2019.
Interserve revealed earlier this month that it was in rescue talks, which could give creditors control of the company, in an effort to avoid the same fate as collapsed outsourcer Carillion.
READ: Interserve says shareholders could see a “material dilution” from deleveraging plans
The group has been hit by a weak construction market and a debt mountain. Carillion entered into liquidation in January for the same reasons.
READ: Carillion collapse confirmed as firm takes steps to enter compulsory liquidation
Shares in Interserve gained 5.4% to 11.47p in morning trading.