Proactive Investors - Run By Investors For Investors

Interserve and Kier in strife as collapse of rival Carillion continues to weigh on industry sentiment

Interserve is urging shareholders to back a rescue deal while Kier has admitted an accounting error that pushed up its debt for 2018 following a disappointing rights issue
Interserve is one of the government’s largest contractors

Outsourcers Interserve PLC (LON:IRV) and Kier Group PLC (LON:KIE) are at risk of the same fate as collapsed rival Carillion as they struggle under the weight of heavy debts.

Interserve is urging shareholders to back a rescue deal in a vote on Friday or the company could face administration.

READ: Interserve’s confirms largest shareholder proposed new terms for its rescue restructuring but says its plan the only way forward

The construction, cleaning and catering contractor is trying to gain support for a proposal that would see lenders write off their debts in exchange for equity from retail investors.

The group’s ill-fated move into creating energy from waste resulted in hefty losses and contributed to a massive net debt of £630mln.

Interserve is one of the government’s largest contractors. Its contracts with the government include cleaning and maintenance for schools, hospitals and railway stations, as well as work for the Ministry of Defence and the Armed Forces.

Kier, which has contracts for major construction projects in Britain, including London’s Crossrail link, has also had a troublesome time of late. 

READ: Kier shares tank as it revises debt higher after disappointing rights issue

On Monday, the company disclosed an accounting error that pushed up its debt for 2018, just two months after its chief executive stepped down following a disappointing rights issue.

Kier said its debt for the year was £180.5mln, compared to the £130mln announced in January.

In January, the construction firm’s chief executive Haydn Mursell resigned after many shareholders refused to buy into a new issue of stock a month earlier.

Just 38% of the rights issue shares were taken up by shareholders,  leaving underwriters to pay out the bulk.

Kier said the rights issue was hit by the fact that bankers have cut their exposure to the industry after becoming more pessimistic following the collapse Carillion.  

In Monday lunchtime trading, shares in Kier were down 12.4% to 435.2p and Interserve shares dropped 8.2% to 13.4p.

View full IRV profile View Profile

Interserve Timeline

Related Articles

May 31 2019
"Stobart Group has a clear focus on developing infrastructure assets in the aviation and energy sectors," chief executive Warwick Brady said.
March 29 2019
RMS is taking action to address the issues at Geocurve and looks forward to “renewed growth in sales to new clients” while it remains "excited by the opportunities at GyroMetric"
Investment papers and laptop
May 07 2019
The investment firm focuses on providing consultancy services to universities and other research organisations to help them commercialise any intellectual property arising from their research

© Proactive Investors 2019

Proactive Investors Limited, trading as “Proactiveinvestors United Kingdom”, is Authorised and regulated by the Financial Conduct Authority.
Registered in England with Company Registration number 05639690. Group VAT registration number 872070825 FCA Registration number 559082. You can contact us here.

Market Indices, Commodities and Regulatory News Headlines copyright © Morningstar. Data delayed 15 minutes unless otherwise indicated. Terms of use