Interserve shares plunge on monitoring reports

Adjust Comment Print

Carillion collapsed on Monday when its banks pulled the plug, forcing the government to step in to guarantee public services provided by the company ranging from school meals to road works.

The group, which has revenues of around £3 billion and employs 80,000 staff worldwide, was down more than 14% in morning trading on the London Stock Exchange.

Interserve, a rival of Carillion until its financial collapse this week, has seen its share price fall sharply on a report the Government is closely monitoring the company.

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".

'We monitor the financial health of all of our strategic suppliers, including Intersetve, ' it said. "We are in regular discussions with all these companies regarding their financial position".

More news: Google's art app uses selfies to find your famous painting look-alike

Gareth Oakley, managing director, SME Banking at LBG, said: "We know how critical it will be for businesses within Carillion's supply chain to receive support with their cashflow, to help them through the temporary challenge to their business".

The Group's support will also include guidance on working capital requirements to help firms unlock cash so they can manage their way through the difficulties they now face.

The move threw hundreds of major projects in doubt and brought down one of the United Kingdom government's most important suppliers.

Tussell, which runs a database of government contracts in Britain, estimates that Carillion was awarded government contracts worth 1.3 billion pounds after the company issued its first profit warning in July.

One of Interserve's subsidiaries is RMD Kwikform, which has operations in Dublin. Interserve warned of lower annual earnings in September, sending shares crashing by more than 50 per cent. The company employs 43,000 staff globally, 20,000 of which are based in the United Kingdom, where most of its business is focused, including construction workers, hospital cleaners, and energy and utility personnel. "This remains the case and we expect our 2018 operating profit to be ahead of current market expectations".