Interserve shares dive on fears for future

Image copyright Alamy

A former big shareholder in construction and facilities management company Interserve has told the BBC he is doubtful the firm can survive.

Shares hit a 30-year low on Monday, and are down a further 15% on Tuesday.

“We could be looking at another Carillion. I don’t see how they can raise the £500m or so needed,” he said.

However, two different sources close to the company denied the firm was close to bankruptcy and said it was set to ask new investors for more capital.

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Interserve, a major UK government contractor, sells services, including probation, cleaning and healthcare, and is involved in construction projects.

The company is making more than £100m in cash and although the construction business has got a few problems, the core facilities management business is doing well, according to people who attended a recent management meeting.

One source added that the sharp falls in Interserve’s share price reflected the growing realisation that existing investors will get a worse deal than those prepared to commit fresh cash.

However, the former shareholder was sceptical those funds could be secured.

“The management team and its track record is not good enough to make a case for investing new money,” he said and added he could not see the necessary money being raised “unless something weird happens from left field, like government providing direct financial support”.

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The company is currently undergoing a three-year reorganisation called Fit for Growth, designed to simplify the business.

Carillion went bust in January of this year after government officials told company bosses that “taxpayers cannot be expected to bail out a private sector company”.