- Interserve said Monday a plan to deleverage its balance sheet could result in 'material dilution' for current shareholders.

Responding to recent press reports regarding plans to deleverage its balance sheet, the company said plans would likely involve converting a substantial proportion of the group's external debt into new equity, an element of which may be sold to existing shareholders and potentially other investors.

'If implemented in this form, the deleveraging plan could result in material dilution for current Interserve shareholders,' the company said.

Interserve and its lenders remained engaged in constructive discussions regarding the agreement and implementation of a deleveraging plan which would deliver a strong balance sheet with Interserve targeting leverage of approximately 1.5x net debt over earnings (EBITD), the company added.

Interserve intended to announce its finalised deleveraging plan, subject to shareholder approval, in early 2019.

Interserve continued to trade well and in line with its expectations for the year ending 31 December 2018, the company said.

'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, said Debbie White, CEO of Interserve.

'Our refinancing in April of this year contemplated the development of a deleveraging plan in consultation with our stakeholders and the liquidity injected at that point also gave us the funding to execute our business plan.'

'Our discussions with our lenders are a positive step in the process that was agreed as part of the April refinancing. The Cabinet Office has also expressed full support for the work we are doing to implement our long term recovery plan.'

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