UK-based Interserve, a multinational support services and construction company, said it was working with its advisers to deliver the optimum capital structure for the group to help support its long-term, sustainable development.

Shares in the company, which employs 75,000 people worldwide and 45,000 in the UK, plunged more than 70 per cent after the news on Monday morning.

Confirming the rescue financing talks, the British group said talks were on with its stakeholders for a debt-for-equity swap that would result in “material dilution for current Interserve shareholders”.

The firm, which operates several joint ventures in the Middle East, said in its statement that it was working with advisors on a deleveraging plan to cut its net debt to 1.5-times Ebitda (earnings before interest, tax, depreciation and amortisation), which will involve extending some of its loans but also swapping some debt for equity.

Interserve said although the form of the deleveraging plan remains to be finalised, it is likely to involve the conversion of a substantial proportion of the group’s external borrowings into new equity, an element of which may be sold to existing shareholders and potentially other investors.

If implemented in this form, the deleveraging plan could result in material dilution for current Interserve shareholders, it stated.

Interserve, which has been working in the Middle East since 1981, intends to announce its finalised deleveraging plan, which would be subject to shareholder approval, in early 2019.

Interserve continues to trade well and in line with its expectations for the year ending December 31.

CEO Debbie White said: "We are making good progress on our deleveraging plan which we expect to announce early in 2019. Our lenders are supportive of the deleveraging plan which will underpin the long term future of Interserve."

"Our refinancing in April of this year contemplated the development of a deleveraging plan in consultation with our stakeholders and the liquidity injected at that point also gave us the funding to execute our business plan," she stated.

"The discussions with our lenders are a positive step in the process that was agreed as part of the April refinancing. The cabinet office has also expressed full support for the work we are doing to implement our long term recovery plan," remarked White.

"The fundamentals of our business remain strong. The deleveraging plan will give Interserve a strong long term capital structure and provide a solid foundation on which to build the future success of the group," she added.-TradeArabia News Service