Shares in the public services provider Interserve have taken a nose-dive after fresh concerns arose that it was seeking a deleveraging deal to eliminate some of its debt.
Shares in the company fell to 6.5p, down 70% from Friday. Just a year ago its shares were worth 100p.
While details of the deleveraging plan have not been agreed, it is likely to involve swapping debt for shares, which will dilute shares for existing shareholders.
The FT reported at the weekend that, if this happened, it would mean public shareholders would be “virtually wiped out”.
Debbie White, Interserve chief executive, said in a statement in response to press reports: “We are making good progress on our deleveraging plan which we expect to announce early in 2019.
“Our lenders are supportive of the deleveraging plan which will underpin the long-term future of Interserve.”
The company has taken several large financial hits in recent years because of troubles with its energy-from-waste (EfW) portfolio.
In 2017, Interserve said costs from its problem EfW contracts will “significantly exceed” £160m.
Viridor is still in discussion with Interserve about recovering expenses incurred by delays to construction of the Glasgow Recycling and Renewable Energy Centre. Interserve was removed as contractor on the project in 2016 after failing to meet its targets.
Interserve is also being investigated by regulator the Financial Conduct Authority about its exit from the EfW market. The probe is in connection with inside information and market disclosures during 15 July 2016 to 20 February 2017.
In November, an Interserve statement on its third quarter update said the company “continues to make progress on closing out its remaining EfW projects and the construction of all the projects is now complete”.
It added: “All of the plants are now operational, receiving waste, and in the final commissioning phase in readiness for handover.”
Interserve has gross revenues of £3.7bn, along with a UK workforce of 45,000 people and 75,000 globally.