Interserve says that it has reached agreement in principle on major commercial terms for a deal that sees its lenders and other financial stakeholders take up to 20% equity in the company. However, the deal remains subject to credit approval from all providers before the new facilities are finalised.
In mid-December Interserve was been granted additional short-term funding and a deferral for the test date for compliance with its loan covenants until 31st March 2018.
Lenders have now agreed to another 30 days’ extension – until 30th April 2018 – to enable all the refinancing paperwork to be completed.
The additional facilities comprise cash facilities of £196.6m plus bonding facilities of up to £95m, maturing in September 2021. Existing debt and private placement loan notes will now end at the same time.
This will give Interserve, in total, cash borrowing facilities of £834m until September 2021.
The company expects to be paying out £56m in interest on the finance in 2018.
As part of the proposed deal terms, Interserve expects to issue warrants to its lenders to buy shares at 10 pence per share (the nominal price of each share). If exercised, this would provide the warrant holders with an interest of up to 20% of the post-issue share capital.
Interserve chief executive Debbie White 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."