Interserve Press Office | Feb 27, 2019
Following its 6 February 2019 announcement, the Board is pleased to provide details of its proposed Deleveraging Plan, which has been agreed with all of Interserve's lenders, bonding providers and the Pension Trustee.
The key elements of the Deleveraging Plan are as follows:
Fully underwritten Placing and Open Offer
Placing and Open Offer of New Ordinary Shares at 15.3 pence per New Ordinary Share to raise approximately £435.2 million;
19 New Ordinary Shares for every 1 Existing Ordinary Share;
The New Ordinary Shares will be provisionally placed with the Senior Cash Facility Lenders, subject to clawback in full to satisfy valid applications by Qualifying Shareholders under the Open Offer;
Any cash proceeds from the Placing and Open Offer will be used to repay the Senior Cash Facilities;
Any New Ordinary Shares issued to Senior Cash Facility Lenders pursuant to their underwriting obligations will be subscribed for in consideration for the release of debt under the Senior Cash Facilities;
For every nine pounds worth of New Ordinary Shares that the Senior Cash Facility Lenders or their designated allottees subscribe for (calculated at the Issue Price), the amount of debt under the Senior Cash Facilities that will be released will be ten pounds, such that the Senior Cash Facility Lenders release a higher par value of debt than will be paid by Qualifying Shareholders who subscribe for New Ordinary Shares at the Issue Price pursuant to the Open Offer. For every nine pounds worth of New Ordinary Shares the Qualifying Shareholders subscribe for (calculated at the Issue Price), which proceeds will be used to repay the debt payable by the Company, one additional pound of debt payable by the Company will be released;
The participations under the Senior Cash Facilities that will be exchanged for New Ordinary Shares or prepaid from the proceeds of the Placing and Open Offer will, in aggregate, be equal to approximately £485 million;
The New Ordinary Shares issued through the Placing and Open Offer will account for 95 per cent. of the ordinary share capital of Interserve as enlarged by the Placing and Open Offer (assuming that, other than the New Ordinary Shares, no further Ordinary Shares are issued by the Company between the release of this announcement and Admission);
Net debt position
RMDK will be ring-fenced within the consolidated Group and, as part of the Deleveraging Plan, £350 million of existing debt will be allocated to RMDK, of which £168.3 million will be cash-pay (the "RMDK FinCo Facility") and £181.7 million will be converted into a subordinated non-cash pay debt instrument (the "IHL Facility"). The debt allocated to RMDK will be non-recourse to the rest of the Group and have its maturities extended to 2023;
Net cash-pay leverage of the Group (excluding the RMDK non-cash pay debt instrument) will be reduced to less than 1x EBITDA and total net leverage (including the RMDK non-cash pay debt instrument) reduced to approximately 2x EBITDA;
New debt facilities
The Lenders will provide an additional £110 million of new liquidity through the provision of a new debt facility with a maturity of 2022 (the “New Super Senior Facility”); and
The Bonding Providers will provide additional bonding facilities to Interserve as required by Interserve’s business plan.
The Placing and Open Offer and the implementation of the Deleveraging Plan are conditional on, among other things, the approval by the Company's shareholders at a general meeting that the Company has also announced today, which will take place at The Broadgate Suite, ETC Venues, 155 Bishopsgate, Liverpool Street, London EC2M 8YD, on 15 March 2019 at 11 a.m. (the "General Meeting").
Each of the Directors who is a Shareholder intends to vote in favour of the resolution to be proposed at the General Meeting.
The Directors do not intend to take up their respective entitlements to New Ordinary Shares under the terms of the Placing and Open Offer.
2018 Preliminary Statement of Results
The Company has also today separately released an announcement containing its preliminary full year results for the 12 months ended 31 December 2018.
The Board considers the Deleveraging Plan to be in the best interests of the Company and its Shareholders as a whole.
Accordingly, the Board unanimously recommends that shareholders vote in favour of the Resolution to be proposed at the General Meeting as they intend to do in respect of their own beneficial holdings of Ordinary Shares amounting to 809,073 Ordinary Shares and 0.54 per cent. of the total number of votes available to be cast at the General Meeting as at the Latest Practicable Date (assuming no further Ordinary Shares are issued by the Company prior to the General Meeting).
Debbie White, CEO of Interserve, said:
"The agreement of Deleveraging Plan terms with our lenders, bonding providers and Pension Trustee represents a significant milestone for Interserve. Implementation of the Deleveraging Plan is in the best interest of all our stakeholders. The plan provides new liquidity and creates a strong balance sheet, which, alongside our Fit-for-Growth programme, will provide us with a competitive financial structure to continue to improve the business and deliver on our long term strategy."
Circular and Prospectus
A Combined Prospectus and Circular (the "Combined Prospectus and Circular") setting out full details of the Placing and Open Offer and the Deleveraging Plan is expected to be published on the Company's website and posted to shareholders who have elected to receive hard copies of shareholder documentation later today.
An expected timetable of principal events is set out in Appendix 1.
Rothschild & Co is acting as Financial Adviser to Interserve.
Numis Securities Limited is acting as Sponsor.
The person responsible for making this announcement on behalf of Interserve is Andrew McDonald, General Counsel and Company Secretary.
For further information please contact:
+44 (0)7880 315877
Tulchan Communications (PR Adviser)
+44 (0) 207 3534200
Interserve is one of the world's foremost support services and construction companies. Everything we do is shaped by our core values. We are a leader in innovative and sustainable outcomes for our clients and a great place to work for our people. We offer advice, design, construction, equipment, facilities management and frontline public services. We are headquartered in the UK and FTSE-listed. We have gross revenues of circa £2.9 billion and a workforce of circa 68,000 people worldwide.
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