Worth £10 million today
Has £600 million-plus debts today.
Worth £10 million today
Worth £10 million today
Has £600 million-plus debts today.
Perhaps using local companies would have been less risky!
“The crisis surrounding outsourcing firm Interserve intensified on Monday as its shares lost more than 75% of their value, crashing to just 6p, as the government contractor battles to negotiate its second rescue deal this year.
The heavily indebted group, which has thousands of government contracts such as cleaning hospitals and serving school meals, said the rescue plan would mean substantial losses for shareholders as the banks that have lent Interserve more than £600m take control of the company. It hopes to wrap up a deal early next year.
Interserve’s shares plunged to 6p in early trading, giving it a market value of less than £9m. At its peak in 2014, the shares were worth more than 700p….”
“Cabinet Office mandarins are believed to have sounded out Interserve’s rivals about the possibility of taking on some of the outsourcer’s work.
The cleaning and building company is heading for a debt-for-equity swap with its lenders as it creaks under debts of £650m. The swap could wipe out shareholders.
Interserve is a significant government supplier, with long-term deals for schools, hospitals and motorways. Jon Trickett, Labour’s shadow minister for the Cabinet Office, last night called for a temporary ban on the company bidding for public contracts — “until they have proved they are financially stable and there is no risk to the taxpayer”.
Interserve said: “The fundamentals of the business are strong and the board is focused on ensuring Interserve has the right financial structure to support its future success.”
Source: Sunday Times
Owl says: Has the message still not got through? Privatise, give your directors MASSIVE salaries and bonuses, look after your shareholders. Then, when it all goes belly-up either (a) get the government (ie us) to bail you out or (b) let your government clients (ie us) go to the wall!
“Interserve: Major government contractor ‘seeks second rescue deal’
One of the UK’s largest providers of public services is seeking a rescue deal as it struggles with £500m of debt, according to the Financial Times.
Interserve, which works in prisons, schools, hospitals and on the roads, said it might look for new investment or sell off part of the business.
Workers at the Foreign Office and the NHS are among Interserve’s tens of thousands of UK employees.
The government said it supported the company’s long-term recovery plan.
The Financial Times reported that the company was looking for a deal to refinance its debt which would mean lenders taking a significant loss while public shareholders would be “virtually wiped out”.
Its share price dropped to a 30-year low last month.
Despite lucrative contracts in the Middle East and its wide range of work in the UK, the company has continued to lose money since March, when it agreed an earlier rescue deal.
Its troubles have been blamed on cancellations and delays in its construction contracts as well as struggling waste-to-energy projects in Derby and Glasgow.
Interserve claims its prospects are improving, and says it will increase profits this year.
What does Interserve do?
From its origins in dredging and construction, the company has diversified into wide range of services, such as health care and catering, for clients in government and industry.
At King George Hospital in east London, for instance, Interserve has a £35 million contract for for cleaning, security, meals, waste management and maintenance.
Its infrastructure projects include improving the M5 Junction 6 near Bristol, refurbishing the Rotherham Interchange bus station in Yorkshire, and upgrading sewers and water pipes for Northumbrian Water.
But Interserve is also the largest provider of probation services in England and Wales, supervising about 40,000 “medium-low risk offenders” for the Ministry of Justice.
In a statement, Interserve said: “The fundamentals of the business are strong and the board is focused on ensuring Interserve has the right financial structure to support its future success.”
The company said its options included bringing “new capital into the business and progressing the disposal of non-core businesses “.
Interserve’s difficulties follow the collapse of Carillion in January 2018, which put thousands of jobs at risk and cost taxpayers £148m.
Government reassures over Interserve
Following that, the government launched a pilot of “living wills” for contractors, so that critical services can be taken over in the event of a crisis. Interserve is one of five suppliers taking part.
A Cabinet Office spokesperson said: “We monitor the financial health of all of our strategic suppliers, including Interserve, and have regular discussions with the company’s management. The company successfully raised new debt facilities earlier this year, and we fully support them in their long term recovery plan.”
Owl says: Bet May and her cronies HATE the National Audit Office!
“The boss of the business that leases cars to people with disabilities on behalf of the Motability charity is stepping down after it emerged he is set to receive a £2.2m bonus on top of his seven-figure salary.
Mike Betts, the chief executive of Motability Operations, came under fire earlier this year after MPs called his annual £1.7m pay package “totally unacceptable”.
A report by the government spending watchdog, the National Audit Office (NAO), published on Friday says as well as his “generous” remuneration, Betts is in line for a previously undisclosed performance bonus worth about £2.2m.
Following the report, Motability Operations announced that Betts would stand down from his position by May 2020, while the group’s chairman, Neil Johnson, would retire in April 2019.
In a statement, Motability Operations said: “After 16 years in the business, Motability Operations chief executive Mike Betts and the board of Motability Operations Group plc have agreed that, following the implementation of actions agreed as an outcome of the NAO review, and working to help the new chairman settle in, a suitable successor will be found, and Mike will step down from the board, no later than May 2020.
“The board is clear that recommendations made by the NAO will benefit from Mr Betts’ experience and skills to see them through.”
The Motability scheme enables disabled people to lease adapted cars using their enhanced mobility disability benefits – either disability living allowance or its successor, the personal independence payment. It currently helps about 614,000 people, many of whom would otherwise struggle to afford a vehicle.
The NAO is critical of the performance plan put in place for Betts and his fellow directors in 2008, saying that the targets meant to incentivise “excellent performance” were set at levels below what the company was achieving when the scheme was introduced.
The targets were “easily exceeded” and in the first seven years of the plan, five executive directors received “generous” remuneration of £15.3m in total, a near fourfold increase for what the NAO suggests was unexceptional performance. …”
“The collapse of the construction giant Carillion has hit the headlines again as auditing failures among the Big Four accountants have come to light. For many, the real impacts (and horrors) of the collapse are only now emerging.
Oxfordshire county council has spent £1.7 million on an audit of the council’s ten-year services contract with the company. It reveals shocking levels of oversight — missing building certificates, fire safety issues, unmet planning conditions — and the scale of the damage done, in health and safety and in financial terms, is breath-taking, especially when you consider the council spent a total of £123 million with Carillion on 602 municipal projects.
We are still to find out exactly what happened behind the scenes, and the results of the Financial Conduct Authority’s (FCA) criminal investigation is hotly anticipated.
The news of the collapse in January was reported alongside photos of the directors’ properties, and details their extravagant pay deals. In June this year the FCA said it was “looking into” allegations of insider trading. Perhaps this was a result of a complaint made in February, by people who say they have been the victims of the directors’ crimes. Increasingly the police are failing to investigate financial crimes, through sheer lack of resources. Will the FCA be able to do any better?
The long story short goes like this: Carillion’s directors had a stack of duties and obligations because they ran a PLC. The huge pay deals are supposed to be there for a reason. One of their many obligations was to keep the market informed of the company’s financial situation. Dishonestly failing to do that is a crime called “misleading statements”. Making misleading statements is related to the crime of insider trading. The point of both crimes is the same: to keep the markets fair. The victims, or at least the people making a complaint against Carillion, are the bosses of a firm called Kiltearn Partners. Kiltearn is an institutional investor: a business which invests large sums in stocks and shares on behalf of lots of smaller investors, such as people putting money into a pension.
In January 2017 Kiltearn owned 10 per cent of Carillion’s shares on behalf of their clients. In March that year Carillion published its 2016 accounts, and everything was painted in rosy colours. Kiltearn staff had no reason to think they should be selling its shares in Carillion. Not until a couple of months later anyway. Because on July 10, 2017, Carillion told the market about a massive problem — there was an £845 million hole in its cash flow. It said it needed to make provision for this, and basically wrote it off. Unsurprisingly the share price tumbled, and Kiltearn was left with the feeling it had been had. Bosses called for an investigation into whether Carillion’s management knew, or should have known, about the cash flow issue — with this statement Kiltearn was reporting a crime.
If there turns out to be solid evidence that the Carillion directors have committed market crimes, it looks likely to follow there will also be evidence that they have committed fraud. It could even be a first prominent outing for “fraud by failing to disclose information”, a section of the Fraud Act 2006.
It will be interesting to see if the FCA has the skill and determination — and ultimately the evidence — to bring the directors to book. In the meantime, it is likely we will continue to see other victims of Carillion’s collapse emerge.”
The author is a barrister at 23 Essex Street
Source: The Times
Private firms are making big money out of children’s social services: