Additional short-term funding has been secured by Interserve, which comes as a welcome reprieve for the support services and construction company after a turbulent few months.
The group said that the additional facilities which are totalling £180m, include a revolving credit facility, bonding facilities and ancillary facilities that will expire on the 30th of March.
It managed to get the said funding by agreeing to close out the company’s cross-currency swaps, which hedge exchange rate exposure of the company’s private placement loan notes in the United States, with proceeds amounting to around £44m going towards repaying the firm’s current bank facilities.
The group said that it was in “constructive talks” currently with its lenders regarding longer-term funding.
The news arrives after Interserve warned last October that it was in danger of breaching its financial covenants with its lenders, provoking the group and its lenders to designate financial advisers.
At the time, Interserve had said that it was looking at “options to maximise the short and medium term cash generation from the business.”
This followed a trading update last September in which it said that annual profits for 2017 were possible to be half of what they were a year earlier, partly because of a provision for an energy-from-waste contract amounting to £195m.
However, it had also said that its support services division was having a hard time with dwindling margins, and the market conditions were poor in construction.
The announcement that it has already secured short-term funding, which the company said placed it on “a firmer footing”, sent the shares in the group rising by 6.4pc to 711p. However, the shares of the company are still down 79pc in the year to date.
Debbie White, its Chief executive, stated: “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.”