Siteserv in advanced talks over ownership

Dublin-headquartered infrastructural support services group Siteserv, has confirmed that it is in advanced discussions over its ownership.

Reports over the weekend suggested that a consortium led by telecoms and media entrepreneur Denis O’Brien was interested in bidding €50m for the company.

Siteserv said earlier this year that it was talking with its chief lender, the Irish Bank Resolution Corporation, ahead of the expiration of its existing debt facilities, due next December.

Yesterday, the company said it was still exploring “a number of strategic and corporate options”, in advance of that date.

It added that it was in advanced discussions with an unnamed party “which may lead to a sale of all of its operating companies”.

“At this stage, it is not possible to quantify the final financial impact for shareholders. However, such a transaction is not expected to have any negative impact for staff, customers, key business relationships or suppliers,” the company added via a stockexchange statement.

Siteserv’s share price fell by nearly 24% yesterday to 2c.

Despite reporting strong first-half figures as recently as December, showing a 9% rise in revenue and a 4% increase in operating profit on the back of a number of new business wins, analysts have for some time felt that Siteserv’s management have few options, due to the company’s large debt pile. However, management said in January that its debt levels don’t pose any risk to the firm’s viability.

“With net debt of around €145m, compared to a forecast EBITDA of €17m, the gearing levels of Siteserv are unsustainable given the lack of recovery in underlying markets.

“Any potential delay is likely to result in the full writedown of the company’s equity value,” commented David O’Brien of Goodbody Stockbrokers in a research note yesterday.


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