Shares in outsourcer Interserve (IRV) are see-sawing between gains and losses this morning after the company published an update on its deleveraging plan which adds little in the way of new news.
At the time of writing the shares are down 3% at 10.5p having been up 6% shortly after the open.
Interserve announced a fortnight ago that a large part of its bank debt would be converted into equity, which would reduce its leverage ratios but heavily dilute existing shareholders.
Today’s update adds a new leverage target, presumably imposed by its lenders, of less than 1.5-times net debt to EBITDA (earnings before interest, depreciation and amortisation).
DEBT REPAYMENT EXTENSION
It also includes a deal to defer its first debt payment due at the start of February to the end of April.
Finally it says that its lenders have asked for the RMD Kwikform subsidiary to be put into a separate holding company owned by them.
RMDK supplies formwork and shoring solutions to construction firms worldwide and has a good name in the industry.
Given that RMDK’s estimated market value is around £250 million compared with Interserve’s market capitalisation of less than £20 million before any rights issue, it’s understandable that the lenders want to ring-fence it from the rest of the business should the worst happen.
Analysts had hoped that RMDK might be sold and the proceeds used to pay down some of Interserve’s debt for the benefit of shareholders but it looks as though the banks have as good as got their hands on it.
