GMB call on Government to step in on Interserve rescue deal
GMB Southern call for government to step in on rescue deal for outsourcing contractor Interserve to safeguard 45,000 staff and services they provide from public funds. “The Government has still not taken on board any lessons from the collapse of Carillion just over a year ago”, says GMB
GMB, the union for staff employed by outsourcing contractors, commented on the reports about debt for equity swap rescue deal.
Paul Maloney, GMB Regional Secretary said: "GMB want the government to step into the rescue deal that INTERSERVE has reached with the creditors to safeguard the interests of the 45,000 employees, the services they provide and of the taxpayers who fund outsourced public services.
“Details of the deal Interserve has reached with its creditors are unclear, but leave a lot of unanswered questions for GMB members working in the NHS, the Ministry of Defence, the probation services, schools and local authorities.
“It appears that under the plans to convert debt to equity, Interserve will continue to make losses for the next seven years at least. GMB is concerned that in order to pursue this strategy, Interserve will seek to attack pay, pensions and other terms and conditions of employment.
“Interserve currently manages a number of failing contracts in the probation services, which are supposed to support the rehabilitation of ‘lesser offenders’. Even the Government recognised that these contracts were failing, and decided to end them two years early (in 2020).
“GMB understands that the Cabinet Office had concerns about the rescue deal. GMB fears that rather than resolve the issues surrounding Interserve, this deal may simply delay inevitable demise. Irrespective of the manoeuvring of the shareholders and creditors, the jobs of some 45,000 Interserve employees, and thousands of others in the supply chain remain under threat.
“The Government has still not taken on board any lessons from the collapse of Carillion just over a year ago. The troubles experienced by Interserve are not unique. The failure of Kier's share issue at the end of last year, the proposed sale of Amey's outsourcing business in the UK to private equity both point to a failing sector.
“The carnage surrounding the sector, with companies underbidding for contracts is a race to the bottom which will see a serious decline in public services. The rot must stop - GMB calls upon the Government, NHS Trusts, Local Authorities and Schools to end the menace of outsourcing, bring contracts back in house, and use the savings to improve public services for all, rather than provide profits and bonuses for the tiny minority of executives and shareholders.
“This is why GMB Southern want Government to step in now."
Contact: Michelle Gordon 07866 369 259 or GMB Southern Press Office 07970 114762
Notes to Editors:
Report by Press Association (6 Feb 2019)
6th February 2019 - 08:18
By Ravender Sembhy, Press Association City Editor
Outsourcing giant Interserve has agreed a debt-for-equity swap with its lenders as part of plans to slash its near-£650 million debt mountain and put the firm on a secure financial footing.
The Government contractor on Wednesday said the likes of RBS, HSBC and BNP Paribas - together with Emerald Asset Management and Davidson Kempner Capital - will seize control of the firm.
Under the terms of the deal, existing shareholders will be wiped out and Interserve's net debt will reduce to £275 million.
The group, which holds crucial contracts for a range of services in prisons, schools and hospitals, will also issue £480 million of new equity as part of the arrangement.
Interserve's building materials division, RMD Kwikform, will remain part of the group and £350 million of debt will be secured against the lucrative unit.
However, one of the firm's existing shareholders, the New York hedge fund Coltrane, has reacted angrily, calling for several directors to be removed from the company's board and install David Frauman and Stuart Ross in their stead.
But Debbie White, Interserve chief executive, said: "The board believes that this agreement will secure a strong future for Interserve. This proposal has been achieved following a long period of intensive negotiation and has the support of our financial stakeholders and Government.
"Its successful implementation is critical to the Interserve group's future and all of its stakeholders.
"The deleveraging plan will, alongside our 'fit for growth' transformation programme, place us in a strong position to deliver our strategy, be competitive in the marketplace and provide a secure future for the Interserve group's employees, customers and suppliers."
Shares in Interserve collapsed as much as 13% at the open, but then settled flat at 13p.
The restructuring comes at a sensitive time for the outsourcing sector, following the collapse of Carillion in January, which led to thousands of job losses.