Interserve has revealed the cost of exiting its Energy from Waste (EfW) business has more than doubled from £70 million to £160 million.

The Board announced an exceptional provision of £70m in May last year to cover exit costs. However, in a trading update today, 20 February, the Board revealed it will increase this provision to £160m "to reflect the incurred and anticipated losses associated with this business".

This is largely due to the company's former Glasgow Recycling & Renewable Energy project, which it was terminated from in November due to project delays.

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As a result, the cash outflow of the EfW contracts has had a "significant negative impact" on Interserve's average debt, which was £390m in 2016. This is anticipated to be around £450m in 2017.

In a statement, Interserve said: "In response to the additional short-term funding requirements through to completion of the exited EfW business (which will be influenced by the resolution of our claims and recoveries), we have put in place, at no material additional cost, new banking facilities with all of our existing, and some new, lenders.

"As a result of this exercise, our debt capacity has been expanded by an additional £66m of committed facilities, and extended in duration by approximately 2 ½ years to a weighted average expiry of July 2021. This, combined with our USPP facilities, gives the Group a total secured, committed debt facility of £573m, which we consider is adequate to meet all of our existing and anticipated future commitments."

(LM/MH)