After Carillion collapse, Interserve share price fell 14 per cent on report ministers were “worried”
Shares in Interserve have dropped as much as 14 per cent this morning after reports emerged that ministers have set up a team of officials to monitor the company following the collapse of rival Carillion.
The Financial Times said MPs had been monitoring the support services firm since a September profit warning when Interserve’s shares plummeted by more than 50 per cent.
“Ministers are very worried about Interserve,” one official told the FT, though another said that there was “no comparison” with Carillion.
Interserve, which last week said it had nipped its woes in the bud, said it continues to have constructive discussions with lenders over longer-term funding and that it is keeping the Cabinet Office closely informed of its progress.
Interserve is no Carillion
The Cabinet Office has since issued a statement saying the two companies are not comparable.
“We monitor the financial health of all of our strategic suppliers , including Interserve. We are in regular discussions with all these companies regarding their financial position. We do not believe that any of our strategic suppliers are in a comparable position to Carillion,” it said.
At the time of writing, the construction and services company’s shares had recovered slightly, down 3.10 per cent at 117.25p.
Neil Wilson, senior market analyst at ETX Capital, echoed the sentiment, saying that while Interserve has had its share of problems, it is no Carillion.
“Its latest update showed improvement and the news will do no good for sentiment given there may be some twitchiness among investors in the sector following Carillion’s collapse.
“Following write downs on contracts – a la Carillion, in October the firm warned that it would likely breach banking covenants at the end of the year but managed in December to secure £180m in short-term funding and deferred the debt test until the end of March.
“Last week it said discussions with lenders were progressing and a further announcement with regards to its longer-term funding arrangements will be made in due course.
“Work to be done for sure but overall quite positive and gave nothing to suggest that it was being put on a financial health watch list,” Wilson said.
Read more: Here’s why Interserve shares just rocketed 20pc