(Reuters) - British outsourcing company Interserve Plc IRV.L said on Sunday it is in talks with its lenders on a debt reduction plan that is likely to involve converting a substantial part of the company's debt into new equity.

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The plan, which is not yet finalised, might see part of the new equity sold to existing shareholders and potentially to other investors, the company, which has around 75,000 employees worldwide, said in a statement.

“If implemented in this form, the deleveraging plan could result in material dilution for current Interserve shareholders,” Interserve said.

Proposals were also being discussed to amend Interserve’s financing agreements, including extending the maturity dates of existing loans, it said.

Support service companies have been under scrutiny in Britain with questions asked about whether private companies should be running essential public services after Carillion Plc collapsed in January, triggering Britain’s biggest corporate failure in a decade and forcing the government to step in to guarantee public services from school meals to roadworks.

Interserve warned in November that its debt would rise more than expected this year amid project delays and a weak construction market, and said it would launch plans to cut borrowing in early 2019.

Under the deleveraging plan being discussed with lenders, Interserve would target a net debt to EBITDA ratio of about 1.5 times, it said on Sunday.

Interserve said it continued to trade well and in line with its expectations for the year ending Dec. 31.

“We are making good progress on our deleveraging plan which we expect to announce early in 2019. Our lenders are supportive of the deleveraging plan which will underpin the long term future of Interserve,” Interserve CEO Debbie White said in the statement.

The company, which among other activities cleans rail stations and provides probation services to the Ministry of Justice, said on Saturday that it was looking at bringing new capital into the business and selling non-core businesses.

That followed a report in the Financial Times that the company was in rescue refinancing talks that could see creditors take control.