Published: Fri, January 19, 2018
Finance | By Cynthia Curry

Interserve shares plunge on monitoring reports

Interserve shares plunge on monitoring reports

Britain's government is under pressure from opposition parties to explain why ministers awarded construction company Carillion 1.3 billion pounds ($1.8 billion) of new contracts after it was known to be in financial difficulty.

Shares in Interserve have plunged following reports that the outsourcing giant has been placed under uk Government watch amid fears for its financial health following the collapse of Carillion.

Shares in British contractor Interserve plunged on Wednesday after a report the United Kingdom government was monitoring the company, exacerbating worries about the sector two days after the collapse of competitor Carillion.

"Why was it apparent to everone except the government that Carillion was in trouble?"

The group issued a warning about its results in September following weak trading last summer.

A spokesperson for the Cabinet Office - which coordinates between the prime minister and other government departments - told the Guardian on Wednesday: "We monitor the financial health of all of our strategic suppliers, including Interserve".

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"Ministers are very anxious about Interserve", said one official, according to the FT report.

"We do not believe that any of our strategic suppliers are in a comparable position to Carillion".

It was followed by an even gloomier update in October when it issued a profit warning and said it may breach its banking covenants as it grappled with escalating staff costs, squeezed margins and a flagging performance from its justice business.

He claimed in his witness statement as part of Carillion's liquidation process that RBS "took unilateral action that in the company's view undermined the group's efforts to conserve cash".

A spokesman said the banks withdrew funding from Carillion because of "viability", adding: "There are reasons the Carillion situation happened".

At the time, Debbie White, Interserve's chief executive, said: "The new management team, and the board, have been working to stabilise the business and provide a sound foundation to continue to serve our customers effectively, underpin our future growth and to restore shareholder value". There is clearly too much debt...

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