Interserve’s shares lost almost 60% of their value after the struggling outsourcer announced a rescue plan that was likely to see a big part of its debt converted into new equity, potentially handing control of the company to its creditors. Interserve (IRV), which employs 75,000 people worldwide and has thousands of Government contracts to clean hospitals and serve school meals, said on Sunday it would seek to cut its debt to 1.5 times core earnings in a plan it hopes to finalise early next year. The company told investors that although the plan was yet to be finalised, it was “likely to involve the conversion of a substantial proportion of the group’s external borrowings into new equity”. This could result in “material dilution” for shareholders, prompting the sharp sell-off. The company’s problems follow the collapse of peer Carillion in January and a parliamentary inquiry that has raised questions over whether private companies should be running essential public services.
Hollywood Bowl Group (BOWL) is confident that Brexit uncertainty will not affect business as it rewarded shareholders with a special year-end dividend for the second consecutive year following bumper results. Pre-tax profits at Britain’s largest bowling alley chain grew 12% to £24.9m in the year to September 30, after an 5.8% rise in sales to £120m. The continued strength of its balance sheet meant that it offered shareholders a special dividend for the second year in a row, increasing 7% to 4.23p a share.
Lenders to seize control of Interserve. The outsourcing giant Interserve (IRV) has admitted it is in talks to hand control to its hedge fund and bank lenders in a deal to cut its debt that is likely to wipe out the value of its shares. The company, which provides services and construction in prisons, schools and hospitals, said last night that it is looking to implement a debt-for-equity swap that will “deliver a strong balance sheet” as banks including RBS, HSBC and BNP Paribas, together with Emerald Asset Management and Davidson Kempner Capital, attempt to force a fresh deal in an extraordinary move that would hand control of the company to the group. Last month Interserve, which employs 75,000 globally and whose shares have declined by more than 70% this year, warned its debt by the year’s end would be £625m to £650m compared with a forecast of £575m to £600m.
Ted Baker (TED) shareholders waver amid fresh ‘serious allegations’. Shareholder support for Ted Baker’s boss is wavering in light of Ray Kelvin abruptly announcing he was taking a leave of absence from the company following fresh “serious allegations”. One top five shareholder, who previously supported Mr Kelvin and had wanted him to stay, said he could no longer back the retail boss without knowing the full extent of the “sinister” allegations. The Telegraph reported yesterday that a female employee alleged the 62-year-old businessman had straddled her at a staff fancy dress party. The allegations add to complaints of inappropriate behaviour that have included forced hugging, neck massages and asking employees to sit on his knee.
Fresh crisis for Dixon’s as EE threatens to pull lucrative supply contract. Dixons Carphone (DC.) is in high-pressure talks towards a new contract with BT’s mobile arm EE, amid investor fears the retailer could be cut off. Chief executive Alex Baldock is attempting to secure a deal in the coming days as Dixons Carphone prepares to report interim results on Wednesday, when it is also expected to reveal a new wave of store closures. Sources said that discussions were positive but there was no guarantee that agreement will be reached. EE’s current deal with Dixons Carphone expires early next year and it has recently signed up John Lewis and Amazon partly to broaden its distribution channels if talks with Mr Baldock collapse.
Questor: joining the FTSE 100 caps the Hiscox Limited (DI) (HSX) success story, but at 17 times earnings it’s a hold. A fourfold increase in the share price has propelled the insurer to the top flight, but valuation is a concern
