Lenders to the troubled support services group Interserve have forced it to parachute in a company doctor in return for a £180m funding lifeline.
Sky News has learnt that a consortium of banks have demanded that the company, which manages the Ministry of Defence’s training base on Salisbury Plain, hire a senior executive from AlixPartners, the firm of restructuring specialists.
Scott Millar, a managing director at AlixPartners, is joining Interserve in the role of chief restructuring officer, according to a source close to one of the lenders.
Interserve failed to mention the appointment of the external advisers in a statement to the London Stock Exchange on Wednesday afternoon announcing that it had secured new funding, which expires at the end of March.
The company’s new chief executive, Debbie White, said the deal put the company “on a firmer footing”.
“Whilst there is still much to do, Interserve has significant opportunities based upon a strong client base and our dedicated employees.
“There is considerable potential for business improvement across the group.
“These short-term committed borrowing facilities, together with the ongoing work to clearly define the strategy and commercial structure for the business going forward, will bring further stability and clarity for our clients, our people and our shareholders.”
The company works on major construction and renovation projects, and is one of the UK’s biggest private sector employers, with an 80,000-strong workforce.
Interserve, which also provides support to UK armed forces in Cyprus, Gibraltar and the Falkland Islands, was plunged into crisis in the autumn when it blamed economic uncertainty and weak Government spending for a massive profit warning.
It has seen both its chief executive and finance director resign in the last year.
The lenders to Interserve, which include HSBC and Royal Bank of Scotland (RBS), had already hired EY in the wake of September’s profit warning.
It said soon after that it was likely to breach its borrowing covenants, raising fears that it was facing a crisis as grave as that confronting rival Carillion.
Interserve also warned that costs associated with exiting its energy-from-waste business would be much higher than a previous estimate of £160m.
?The company now has a market value of less than £100m, reflecting the travails of the wider outsourcing sector.
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Interserve confirmed the appointment of Mr Millar, saying it was “to support the group’s ongoing discussions with its lenders”.
The company denied that the appointment was forced on it by the banks.
Source: Sky News