Interserve has been granted another month to secure a refinancing deal with an agreement in principle on major commercial terms now reached.

However, the commercial terms remain subject to credit approval from all providers before the new facilities are finalised.

Interserve delivered its latest profit warning in November as it battled not to breach bank loan covenants. The firm is also preparing to cut around 200 jobs across its UK operations as part of a wider cost-saving drive.

Just last month it began a formal redundancy consultation after confirming plans to shut down its specialist power contracting business.

The troubled construction and support services firm secured additional short-term funding of £180 million in December to ease off its immediate financial troubles while the test date for compliance with its loan covenants was deferred until March 31.

The compnay has now reached an agreement with key lenders to push back the test date for compliance to April 30 to enable the successful execution of all documentation required for the refinancing.

The additional facilities comprise cash facilities of £196.6m plus bonding facilities of up to £95m, which will mature in September 2021. Existing debt and private placement loan notes will be amended to be co-terminous with the new facilities.

In total, this means that the company will have cash borrowing facilities of £834m immediately following the refinancing completion and through to September 2021, subject to certain step-downs in the new facilities over the period.

Pricing on both the new facilities, and the existing debt and bonding facilities have been renegotiated as part of the refinancing. Interserve anticipates that the total interest expense in 2018 will be approximately £56m of which circa £34m will be cash interest.

Debbie White, Interserve’s chief executive, said: “Today’s announcement is a significant milestone for Interserve and a major step in securing a firm financial platform to underpin the Group’s future. We are encouraged by the support from our lenders in respect of these new facilities, which will allow the new management team to execute our business plan, focused on delivering a great service for customers, driving growth and restoring value.”