Interserve lenders hire Lazard amid £600m rescue bid

Lenders to the troubled outsourcing group Interserve (Frankfurt: 860509 - news) have drafted in bankers to stitch together a make-or-break restructuring that is likely to see them take control of the company.

Sky News has learnt that Interserve's creditors have appointed Lazard (Frankfurt: A0DQP8 - news) to help thrash out the details of a debt-for-equity swap and share issue that have become necessary to salvage its future.

Interserve, which employs roughly 45,000 people across the UK and is one of the government's biggest private sector contractors, saw its shares plunge by more than half on Monday after warning that investors were likely to see "material dilution" from its debt reduction efforts.

Sources said that Lazard would join EY, the accountancy firm, as an adviser to Interserve's lenders - reuniting the team which worked for the board of Carillion (Frankfurt: 924047 - news) prior to its collapse in January.

The company is understood to be drawing up plans to convert more than half of its debt-pile to equity, with investment banks including JPMorgan (LSE: JPIU.L - news) , Numis and Peel Hunt expected to be engaged to assist with a further equity fundraising.

Interserve, which works on major construction and renovation projects, is one of the UK's biggest private sector employers, providing support to Britain's armed forces in Cyprus, Gibraltar and the Falkland Islands.

The crisis surrounding its finances has persisted for more than a year, initially blaming economic uncertainty and weak government spending for a massive profit warning in the autumn of 2017.

Led by chief executive Debbie White, Interserve said in a statement to the stock market that the company and its lenders "are engaged in constructive discussions regarding the agreement and implementation of a deleveraging plan which would deliver a strong balance sheet".

The company is the latest in a string of UK outsourcers to face material uncertainty over its finances, with Carillion's insolvency coming in the wake of rescue efforts at Capita (LSE: CPI.L - news) and Serco.

In recent weeks, Kier Group (LSE: KIE.L - news) , another major industry player, has announced plans to raise more than £250m by selling new shares - a move which has caused its own share price to plummet.