EDDC HQ builder in trouble – “problems emerged two years ago”

Owl says: due diligence?

September 2017:

“Construction of East Devon District Council’s new headquarters in Honiton is progressing well with groundworks completed and the building foundations underway.

The council is expected to be working in the new premises by December 2018 and contractors, INTERSERVE Construction Ltd, are on schedule to complete on time. …”

http://eastdevon.gov.uk/news/2017/09/foundations-in-place-for-new-east-devon-district-council-hq-in-honitons-heathpark/

TODAY:

Outsourcer Interserve seeks vote for borrowing increase

INTERSERVE will call a meeting of shareholders to seek approval to increase its borrowing limits and prevent it breaching its banking covenants.

The construction and public services group says that it needs higher borrowing levels because of expected “significant balance sheet writedowns”, which it expects to report in full-year results delayed until the last day of this month, only two days after the meeting.

INTERSERVE is one of Britain’s biggest outsourcing companies, cleaning schools, hospitals, government offices and railway stations. It also operates facilities for the ministries of defence and justice. It has annual revenues of £3.2 billion and employs 80,000 people.

It has been feared that INTERSERVE could become another Carillion, a larger rival that went bust at the turn of the year after the failure of several building contracts. Interserve is on the government’s watch list, with Deloitte, the accounting firm, having been brought in to monitor the company. EY, another of the Big Four accountants, is advising Interserve and its lenders.

The business’s problems emerged two years ago after the failure of a venture to build energy-generating incinerators led to it having to pay out £195 million in compensation and penalties.

In a statement to the stock market, Interserve said that at its year-end, its net debt had risen to £513 million. …”

Source: Times (paywall)

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