Interserve is setting aside £160M to cover the cost of exiting the energy from waste (EfW). This is more than from its previous estimate of £70M.
Last year Viridor terminated Interserve’s contract for the glasgow recycling and renewable energy project was terminated. Doosan Babcock has now taken Interserve’s place.
In a business update, Interserve said: “We have considered the implications of this development with our legal advisers and expect a lengthy period of litigation to ensue. Alongside this exercise we have continued to undertake a detailed review of operational developments on the other contracts in our exited EfW business, including the impact of the entering into administration by our principal gasification subcontractor, Energos, together with the likelihood and timing of potential recoveries and claims from third parties.”
In the light of this, the board said that the £70M set aside for losses with the business is no longer adequate, and it now expects costs to reach £160M.
It said the losses from the EfW contracts have increased average net debt, which was £390M during 2016, and is now anticipated to be around £450M for this year. To mitigate this, Interserve has set up new lending arrangements.