Maritime origins – 1880s–1945 Interserve could trace its origins to 1884, when the
London and Tilbury Lighterage Company Limited was formed to transfer
goods by
sailing barge to and from
ships on the
River Thames,
London,
England. In 1888 the company expanded into
dredging, securing a
contract with the
Port of London (PLA) to remove dredged ballast. Lightering gradually declined due to the increase of
road traffic, and dredging became the mainstay of the company. In 1938 the company's lighterage fleet was amalgamated with vessels owned by W H J Alexander Limited and
Tate and Lyle Limited to form Silvertown Services Limited TCDC tugs and barges In June 1944, company tug
Danube VI participated in Operation Neptune, the D-Day invasion of Normandy, known as the
Normandy landings by towing the 'Phoenix' (
mulberry harbour breakwater units) and 'Whale' (floating roadway units that connected the mulberry harbour pier heads to the landing beaches), as well as ammunition barges from
Littlehampton across the English Channel to the Normandy beachhead. and
United Arab Emirates (Khansaheb), both of which were initially established by Douglas in 1981. A series of acquisitions and
disposals in the late 1990s and 2000 moved the group's focus away from
property development and
housebuilding, as it sought to build presence in the
maintenance and
facilities management sectors, though it retained a strong presence in traditional construction contracting. Acquisitions included electrical engineering contractor J R Williams in 1997, the facilities management and engineering services business How Group purchased for £46m in 1998, the £75m takeover of industrial and equipment services specialist Bandt Group in 1999 and, in a £75m purchase, facilities management company Building and Property, responsible for providing accommodation and property services to
government departments. During this period the company disposed of its Scottish housebuilding business to
Persimmon plc, diminishing the significance of revenues from traditional construction contracting workstreams, with the newly diversified group now earning significant revenue through its facilities management and maintenance capability, which are otherwise known as support services provision. To reflect this change it renamed itself
Interserve in 2001. After re-structuring to accommodate the acquisition, Interserve announced it had discovered accounting irregularities in its Industrial Services business - an announcement that saw its share price fall by 14%. This decline led to threats of legal action by former MacLellan shareholders, who had accepted shares in Interserve as part of the acquisition and saw the value of their holdings dramatically drop. The company was also forced to delay the official publication of its interim results to investors, so as "to verify the adjustment needed" as it sought to reconcile the misstatements. In 2007 the group acquired a 49% stake in the Qatar-based Madina Group. In 2008 Interserve expanded into markets in Abu Dhabi and Northern Europe. On 25 February 2011 the company emerged as a bidder for fellow support services provider,
Mouchel, as Interserve aimed to "target the rapidly growing market for fully integrated outsourcing services." Interserve had approached the target with an offer believed to be in the region of £191m, or 170p per share; Mouchel had previously rejected two bids from
Costain. However, after conducting due diligence on the consulting group, Interserve reduced its indicative offer to a reported £151m, or 135p per share, and this was subsequently rejected. Interserve did not progress the bid and no formal offer was tabled. On 4 May 2012 the company acquired "Welfare-to-work" provider Business Employment Services Training (BEST), a UK provider of
training and development for job-seekers and
employers. Then on 12 October 2012 Interserve announced that it had sold its stakes in some UK
private finance initiative hospitals, schools and prisons for £90m. Dalmore Capital Fund, a UK infrastructure fund, agreed to buy 19 of the PFI investments, which generated £4.6m profits for the group in 2011. The
Financial Times reported the sale as including "the stakes are five in hospitals – including University College London, Carlisle and Newcastle – five in schools, two in prisons and several in defence establishments." On 18 December 2012 it was announced that the company had acquired Advantage Healthcare, a leading UK provider of
healthcare at home services for £26.5m in cash. Then on 7 January 2013 the organisation announced the acquisition of The Oman Construction Company for a cash consideration of $34.1m. On 28 February 2014, the company acquired Initial Facilities from
Rentokil Initial for £250m. In October 2014, Interserve benefitted from the UK Government's privatisation of the
probation sector, securing contracts to run criminal justice services in five areas.
Financial difficulties – 2017-2019 On 14 September 2017, Interserve reported additional costs associated with quitting the energy-from-waste (EfW) sector. In February 2017, these costs were revised from £70m to £160m; in September 2017, the figure had risen "significantly" but no new estimate was given (in March 2018, the developer of a
Glasgow EfW plant said it was in "ongoing" discussions with Interserve after costs rose by £95m to £250m, with
Viridor contractually entitled to recover incremental costs from Interserve.) The company's lenders, including
HSBC and
Royal Bank of Scotland, called in accountants
EY to advise, to work alongside
Debbie White, CEO from 1 September 2017. On 19 October, the firm was reported to be "battling for survival" after warning it would breach bank loan covenants; shares slumped 38% to 55p, valuing the company at just £80m, On 20 October 2017, the company was awarded a £227 million contract to provide facilities management services to the
Department for Work and Pensions. On 13 November, Interserve was set to axe 200 jobs in a cost-cutting drive, with further job losses expected. On 14 December 2017, it was reported that Interserve had secured £180m in short-term funding from its banks and had pushed back the test date for compliance with loan covenants to March 2018. Interserve also appointed a rescue specialist, Scott Millar, as chief restructuring officer. On 10 January 2018, Interserve warned that its debt was set to rise above £513m at the year-end due to redundancy costs and cash outflows from its legacy EfW projects. Following the January 2018 collapse of
Carillion, the
Financial Times said Interserve was being monitored by the UK Government; the report led to a 15% drop in Interserve's share price, later largely recouped - a market analyst said: "in the case of Interserve the arithmetic doesn't look anything like as bad as Carillion". Market uncertainty following Carillion's liquidation continued, partly fuelled by a 30 January profits warning by
Capita, after which Interserve's share price dropped nearly 20%. On 12 February 2018, accountancy firm
Deloitte was drafted in advise ministers on public sector contracts held by Interserve. On 21 February, Interserve announced it was closing its power lines business, putting over 70 staff at risk of redundancy. Three days later, Interserve was said to be struggling to agree a debt refinancing deal because Carillion's liquidation had spooked lenders; Interserve denied the talks had stumbled. On 26 February, Interserve's share price fell 12% to close at 57p. On 3 March, Emerald Investment Partners, the family firm of
Punch Taverns founder Alan McIntosh, acquired £140m of Interserve debts on secondary markets in a bid to save the company. Interserve was reported to have cut 500 administrative staff in the last quarter and to be planning a further 1,000 job losses by the end of 2018. On 8 March, a series of equity swap deals bolstered Interserve's share price; the following day Interserve put its stake in the £200m
Haymarket development in
Edinburgh up for sale to help reduce its near £600m debts.
2018 financial restructuring On 21 March 2018 Interserve announced it had agreed commercial terms with its main bankers for extra cash facilities of £197m and fresh bonding facilities up to £95m. Lenders agreed a further 30-day extension for completion of the refinancing paperwork (concluded on 27 April). The refinancing news drove shares up almost 26% to 87.9p. However, the share price tumbled 13% in early trading on 30 April after Interserve reported a £244m loss for 2017, with debts almost doubled from £274m to £502.6m; analysts anticipated a possible sell-off of Interserve's international support services and construction divisions. On 31 May, the operator of the Glasgow EfW scheme claimed Interserve owed £69m in additional costs; in November 2018, Viridor said it expected to receive at least £64m from Interserve. Interserve reported its half-year results on 7 August 2018. These showed a pre-tax loss of £6m, said 470 jobs were lost, and showed revenue dipping to £1,488m from £1,647m. Legacy EfW contracts dragged results down, but Interserve aimed to complete and hand over problem EfW contracts by the end of 2018 (in January 2019,
New Civil Engineer reported that handover would happen in the first half of 2019). The business suffered a £6.6m loss from exiting the London construction business, and incurred £10.8m in restructuring costs and £32.1m in 'professional adviser fees' in connection with its refinancing. Net debt at 30 June was £614.3m, with Interserve expected to pay £80m in interest costs in 2018. though it later ended down just 10% on the day. A critic blamed its problems on ill-timed acquisitions, expansion into areas (probation, healthcare, EfW) where it had no experience, and a weak
balance sheet (of £427.4m intangibles on its balance sheet, £372.9m was
goodwill). In a 23 November trading update, CEO Debbie White said the group would unveil plans to tackle its debt mountain in early 2019 after revealing year-end net debt would be worse than expected, up to £625m-£650m due to additional cash outflows on EfW projects and slow payments in Middle Eastern markets. The news pushed down shares 9% (closing at 33p), and there was further pressure on 26 November when
West Yorkshire Police said it would be seeking compensation for faults in construction of custody suites in
Leeds and
Wakefield. Interserve shares closed on 30 November down 6.5% at 28p. The share price slide continued into December (closing at 21p on 4 December), after, in
Building,
Specialist Engineering Contractors Group CEO Rudi Klein advised members not to work for Interserve if possible.
Failed 2019 financial restructuring On 7 December 2018, Interserve was reported - for the second time in 2018 - to be in rescue refinancing talks, with banks and other debt holders (including RBS, HSBC,
BNP Paribas, Emerald Asset Management and
Davidson Kempner Capital) preparing to incur losses in a debt-for-equity swap that would see public shareholders virtually wiped out. On 10 December, Interserve confirmed its deleveraging plan could result in "material dilution" for current Interserve shareholders; shares dived, eventually closing 53% down at 11.5p. Fearing problems similar to those faced by clients after Carillion collapsed, the Labour Party urged the Government to bar Interserve from bidding for public contracts, but the Cabinet Office insisted Interserve was different from Carillion. Meanwhile, Interserve announced a £25m contract win at a Welsh hospital. Restructuring options included spinning off the £250m building materials unit
RMD Kwikform to lenders, leaving the remainder of Interserve as a more focused support services business. The core principles of the deleveraging plan were reported to have been conditionally agreed between Interserve and its lenders on 21 December 2018, but negotiations continued through January 2019, with the deal, excluding sale of RMD Kwikform, reported to be close to announcement on 3 February. The Cabinet Office reportedly objected to any deal involving selling RMD Kwikform, believing this would render the remainder of the business almost worthless, making it difficult to continue awarding contracts to the company. On 6 February, Interserve announced it had agreed a deleveraging deal with its lenders: it planned to raise £480m through a new share issue (accounting for 97.5% of the total issued share capital), reducing debts from over £600m to £275m, and retaining RMD Kwikform in the group. The plan was subject to approval by Interserve's shareholders, but Interserve was "actively preparing alternative plans" in case that approval was not given;
administration remained a possibility. One major shareholder, hedge fund Coltrane Asset Management, while supportive of the CEO, requisitioned an
extraordinary general meeting (EGM) calling for the removal of eight other directors; another shareholder, Farringdon Capital Management, also voiced opposition to the proposed rescue plan. On 14 February, it was reported that blocking the deleveraging plan and removing key board members could trigger an immediate £66m repayment to lenders, weakening Interserve's financial position still further. On 20 February, Coltrane had grown its stake and now held 27.7% of Interserve's voting rights through publicly traded shares. In view of shareholders' opposition, on 22 February lenders were reported to be amending the debt-for-equity proposals so that existing shareholders would own 5% of Interserve. However, an alternative Coltrane proposal (retaining a 10% equity share for shareholders) had also been put to Interserve, while
EY had been put on standby to act as administrator. The proposals were to be subject to an EGM vote on 26 March, later brought forward to an
AGM vote on 15 March. On 27 February, Interserve announced its financial results for the year to 31 December 2018, recording a pre-tax loss of £111.5m on a turnover of £2904m (down 10.7% due to a drop in UK construction activity and tighter bidding criteria). Net debt increased to £631.2m, and the company warned: "successful implementation of the Deleveraging Plan is critical to our future." Professional fees for the 2018 refinancing totalled £43m with a further £33m set to be paid in connection with the deleveraging plan. A further £12.6m in losses on problem EfW contracts brought the total loss to date to £229.2m. Coltrane remained opposed to the deleveraging plan, angered by expenditure on the plans and by directors' reluctance to invest in new shares. Interserve's £90m expenditure on fees (to investment bank Rothschild investment bank, broker
Numis, lawyers
Ashurst LLP and
Slaughter and May, accountant
Grant Thornton and PR firm Tulchan) was said to be equivalent to the cash the firm would have if its restructuring plan was successful with shareholders. Coltrane called the sell-off to fund debts "an obscenity," However, the Interserve board rejected this proposal, while lenders lined up a precautionary '
pre-pack administration' that would wipe out existing shareholders but keep Interserve operating if the deleveraging plan was not approved. On 11 March, lenders tried a last-ditch effort to win shareholder support by increasing the amount of equity retained by shareholders to 7.5%, but this was not backed by Interserve's board which urged support for the deleveraging plan offering shareholders 5%. Coltrane warned Interserve's prospective administrator against arranging a pre-pack insolvency deal, demanding rigorous and comprehensive marketing, and holding out the prospect that Coltrane might acquire the company from the insolvency process.
Administration – 2019–2022 At the 15 March AGM, the deleveraging plan was rejected by shareholders, and trading in the company's shares was suspended. Interserve's board confirmed it had applied for the parent company to be placed into administration, and said it was pursuing the pre-pack option. The board later announced the group had been sold to a new company, to be called
Interserve Group Ltd, controlled by Interserve's existing lenders. The administration and pre-pack process meant banks wrote off up to £800m in loans, while Coltrane, Farringdon and around 16,000 small shareholders all lost their investments. Unions and others expressed concern about the government's continued awarding of contracts to Interserve during its financial troubles, but a Cabinet Office spokesperson said its processes and financial check had been robust, adding: "The refinancing process that Interserve executed led to the smooth continuation of public services and safeguarded thousands of jobs." However, around 200 firms that provided IT, HR and property management services to Interserve plc risked not being paid. EfW client Viridor repeated its claim that, despite the administration, the still operating Interserve Construction owed £64m for work on its Glasgow plant; in November 2019, Viridor issued arbitration proceedings to reclaim £72m. In June 2019, it was reported that Interserve had collapsed owing creditors over £100m. Rival outsourcing firms including
Mitie,
Serco and
Sodexo were reported to be considering bids to acquire Interserve's core support services business, valued by lenders at around £300m. In April 2019, the
Financial Reporting Council launched an investigation into auditor
Grant Thornton's work on Interserve's financial statements for the years 2015, 2016 and 2017 (Grant Thornton and the partner involved were fined £1.3m by the FRC in 2021 for 'scepticism failure'). Interserve announced that Mark Whiteling, chief financial officer since September 2017, would be leaving the company; and a dispute with
Sandwell MBC over allegedly defective Interserve-built school buildings was reported. In June 2019, chairman
Glyn Barker was reported to be preparing to step down, with
Alan Lovell named as his successor in July 2019. In July 2019, Interserve's partner on the Derby EfW project, Renewi, said it was resigned to having its contract terminated, with the plant's handover more than two years late. Renewi said it had a £11.6m claim against Interserve.
Derbyshire and
Derby City Council said they were preparing to cancel the £950m waste management contract, which was formally terminated in early August 2019. The councils later (November 2021) considered scrapping the facility. In November 2019, Interserve announced an operational restructuring of the business; as a result, CEO Debbie White would leave the business, with CFO Mark Morris assuming some of her responsibilities. A City analyst said that the restructuring "looks like a precursor to the future splitting up the group." In March 2020, auditors red-flagged Interserve's finances as the company planned to break up its businesses. In April 2020, the period of administration of Interserve plc was extended. Disposal of Interserve plc's 49% stake (valued in 2018 at £2.7m) in a Qatari business was delayed due to the
COVID-19 pandemic restrictions in
Qatar, so administrator
EY was granted a two-year extension until March 2022. EY said secured creditors of Interserve plc, owed around £65.2m, were not expected to receive any payout from the administration.
Group break-up In June 2020, Mitie announced it was to buy Interserve's 40,000-strong facilities management business in a cash and shares deal initially worth £271m, later valued at £190m (£120m in cash and a 17.5% shareholding in Mitie). The deal, cleared by competition authorities in November 2020, On 2 March 2021, Interserve announced it was rebranding its construction and engineering services businesses, resurrecting the
Tilbury Douglas name. Its Citizen Services business, providing community rehabilitation services in five UK areas, was renationalised by the
Ministry of Justice on 24 June 2021 as part of the UK Government’s new model of probation delivery. On 6 October 2021, it was reported that RMD Kwikform was set to be sold to France's Altrad group for over £140m - a sale confirmed the following day. In January 2022,
Kier Group was reported to be in advanced talks to acquire Tilbury Douglas, with speculation Kier might pay around £50m for the almost-£500m turnover contractor. However, Kier discontinued negotiations in March 2022. Interserve plc was officially wound up at the High Court on 21 January 2022, closing the administration process, though some outstanding issues relating to Interserve plc's stake in a Qatari business remained to be resolved, as did calculation of how much the company owed to HMRC. The former administrator, EY-Parthenon, was to continue work on these issues. During administration, debt of £815m and over £200m in other liabilities was wiped out by stakeholders in exchange for equity in Interserve Group Limited. Secured creditors would get no further cash from Interserve plc. In June 2022, Tilbury Douglas fully separated from Interserve Group and became a standalone construction contracting company owned by Interserve banks. Managing director Paul Gandy said the business had delivered more than £500m of projects in 2021, and its order-book totalled over £1bn. In the year to December 2019, it had a turnover of £480m but reported a £95m pre-tax loss. Tilbury Douglas was the last major part of Interserve Group; some smaller assets are expected to be sold before Interserve is finally shut down in 2024. Interserve's accounts for the 18 months to June 2021 showed company revenue of £2.1bn during the period and a pre-tax loss of £309m. ==Operations==