Interserve finally agrees refinancing deal with banks

Interserve has finally struck a refinancing deal with its banks to tide the business through its cashflow problems.

The firm revealed today that it had agreed commercial terms in principle with its main bankers for extra cash facilities of £197m and fresh bonding facilities up to £95m.

As part of the proposed deal Interserve’s bank’s have options to buy shares at 10p per share, which if exercised, this would give them a 20% stake in the group.

These commercial terms still need to be rubber stamped by all Interserve’s lenders.

Debbie White, Interserve’s chief executive, said: “Today’s announcement is a significant milestone for Interserve and a major step in securing a firm financial platform to underpin the Group’s future. 

“We are encouraged by the support from our lenders in respect of these new facilities, which will allow the new management team to execute our business plan, focused on delivering a great service for customers, driving growth and restoring value.”

Interserve’s banks have also agreed to extend the covenant test deferral date and the maturities of the financing facilities agreed in December 2017 to 30 April 2018 to enable the successful execution of all documentation required for the refinancing.

These new facilities will mature in September 2021.  Existing debt and private placement loan notes will be amended to be co-terminous with the new facilities.

Borrowings made under the incremental short-term facilities agreed in December 2017 and which now expire on 30 April 2018 (under which the Company has drawn £45m of the revolving credit facility) will be repaid out of the new facilities, once these are in place. In total, this means that the company will have cash borrowing facilities of £834m immediately following the refinancing completion and through to September 2021, subject to certain step-downs in the new facilities over the period.

Pricing on both the new facilities, and the existing debt and bonding facilities have been renegotiated as part of the refinancing.

It is anticipated that the total interest expense in 2018 will be approximately £56m of which circa £34m will be cash interest. The increased cost of bonding instruments already issued will be circa £3.2m, of which the cash impact is less than £1m.

We have, as part of this process, engaged extensively with the Trustee of the Interserve section of the Interserve Pension Scheme with respect to the new refinanced structure and their security protection. This has been agreed with them, subject to the finalisation of the required documentation.

 

 

from Construction Enquirer http://www.constructionenquirer.com/2018/03/21/interserve-finally-agrees-refinancing-deal-with-banks/

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