Interserve Stock Plunge After News About Rescue Plans

Interserve Stock Plunge After News About Rescue Plans

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UK’s Interserve, one of the biggest public service providers is strapped for cash and this has sent its shares reeling…The stock took a plunge after it announced that it sought a rescue deal.  Interserve is burdened with a debt of £500m. The service provider has been involved in working at the prisons, hospitals, roads and schools is mulling coming out with issue of news shares as a bailout.

Post the announcement, the shares took a beat and slide to 6.5p, a whopping 70% wipe off from the previous close. However, it recovered to close at 11.5, still showing a fall of 53%.  The shares were worth 100p each just a year before.

While the firm mentioned that they were making good progress, it said that that currently the share value was slashed and that could lead to a dilution for its shareholders.  The details of the rescue plan are not finalized as yet.

The Government will be offering support to Interserve in its path to recovery and is given a new contract worth £25m for redeveloping Merthyr’s Prince Charles hospital, work on which is slated to begin next month.

It is understood that creditors of Interserve are ready to forego part of its loans in a bid to help company survive. Talks are on and lenders believe that the company has an extremely fluid future.

The Labor party principally opposes inclusion of private companies in providing public services and maintains that since the company is in financial doldrums, no further government contracts be given to them.

Such financial problems are perceived to cause a negative impact on company future, given that it employs over 75000 employees globally, out of which 45000 employees are in UK.

The company is confident about its plan to deleverage, which will reflect in a stronger balance sheet, it said.

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