Netherlands- headquartered Imtech building services group is warning that its return to profitability is taking more time than previously anticipated due to difficulties in its UK, Dutch and German businesses.
In its latest trading update for the first half year 2015 published today, Imtech said that based on the performance of the first half year and an updated forecast for the remaining of the year, a return to profitability was taking more time than previously anticipated.
The group said this applied in particular to performance in Germany due to challenges in downsizing the business and higher than expected losses in old projects, the Dutch building services business (higher than expected project losses and lower margins) and its UK water business as a result of project losses in closure of several larger older contracts and market related start-up delays of new projects. For those reasons, achieving a positive operational EBITDA – essentially, its net income - for the year would be “very challenging.”
Imtech’s UK water sector clients include Severn Trent Water, Southern Water, Thames Water and United Utilities – the firm belongs to a number of AMP6 Tier 1 delivery alliances.
Imtech’s operational losses in the first half of the year now look to set to rise - up to €45-€50m, compared to €25m in the same period in 2014.
“Advanced and constructive dialogue with financiers”
The group is currently highly indebted with net interest-bearing debt at the end of June 2015 standing at approximately €545 million. Imtech's total credit facility is around €700 million. Of the total available liquidity of circa €150 million, €50 million is committed liquidity in support of joint ventures and guarantees.
The trading update said:
“To address the slower than anticipated return to profitability, Imtech and its financiers are in a constructive dialogue about all possible long-term structural solutions and are in a constructive and advanced dialogue about an amendment to the financing arrangements including an increase in liquidity headroom for the group and its subsidiaries. A liquidity facility of €75m, in addition to the existing facility of €700m, has been agreed to, subject to credit committee approval of certain financiers.”
The liquidity facility will be available until the end of December 2015 in two tranches of €37.5 million, with the first tranche expected to become available within the next week. The second tranche will be available within four weeks, provided that certain conditions are met.
In an effort to accelerate Imtech's turnaround, the company has hired Alvarez & Marsal, a leading global professional services firm specialised in providing comprehensive performance improvement, turnaround management and interim management services. Stefaan Vansteenkiste, an experienced turnaround manager and country head of Alvarez & Marsal Benelux, will join Imtech's management board as Chief Restructuring Officer from the second half of August. He will be responsible for reviewing and overseeing the implementation of Imtech's restructuring and performance improvement initiatives.
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