Interserve sheds debt in survival deal

An artist's impression looking down on Sheffield University's Heartspace development, which will connect the Mappin Building with the Central Wing.

The Government contractor said the likes of RBS, HSBC and BNP Paribas - together with Emerald Asset Management and Davidson Kempner Capital - will seize control of the firm. Under the terms, existing shareholders will be wiped out and Interserve’s net debt will reduce to £275m. The group, which holds crucial contracts for services in prisons, schools and hospitals, will also issue £480m of new equity as part of the arrangement.

Interserve is half way through construction of an ambitious £20m atrium over Sheffield University’s historic engineering faculty.

The Grade II listed Mappin Building and 1855 Central Wing on Portobello Street have undergone months of disruptive preparatory engineering work, although girders and glass have yet to be installed. The two-year scheme is not scheduled to finish until late summer.

Interserve’s building materials division, RMD Kwikform, will remain part of the group and £350m of debt will be secured against the lucrative unit.

The outsourcer employs 25,000 people in the UK and 80,000 globally and has shed hundreds of jobs in the last two years.

Debbie White, Interserve chief executive, said: “The board believes that this agreement will secure a strong future for Interserve. This proposal has been achieved following a long period of intensive negotiation and has the support of our financial stakeholders and Government.

“Its successful implementation is critical to the Interserve group’s future and all of its stakeholders.

In November, Keith Lilley, director of estates and facilities management at Sheffield University, said: “We are aware of the challenges Interserve continues to face. We are working with its senior management team to ensure we can have confidence in the delivery of this important project.”