Shares in the construction and services company tumbled more than 8 percent before recovering some ground to trade 3.8 percent lower at 33.7 pence by 0900 GMT.

The company, which alongside its peers has been under scrutiny since the collapse of rival Carillion this year, said trading was in-line with its forecasts in the first nine months of 2018.

Carillion was liquidated after contract delays and a slump in business left it swamped by debt and pensions liabilities.

Interserve repeated its forecast of significant operating profit improvement in 2018, seeking to soothe investor nerves about its finances after it missed a deadline to bring its energy-from-waste plant in Derby into full service.

"There is anecdotal evidence that Interserve's financial position is making it hard to win new work," Liberum analysts said. "We believe that everything is on the table, including the disposal of Equipment Rental."

Interserve declined to comment when asked if the company's financial position was hurting its ability to secure new work.

A source familiar with the matter said that a disposal of the equipment services business was unlikely.

The company said it expected year-end net debt in the range of 625 million pounds to 650 million pounds, higher than an earlier range of 575 million pounds and 600 million pounds.

Interserve, which has been shedding assets to cut debt, said it continued to see lower revenue in domestic construction work and faced weakness in business abroad, particularly in Qatar.

(GRAPHIC
: Interserve faces project delays, mounting debt,

The Liberum analysts said the company might have to issue new shares to raise cash but said this would be hard without more clarity about its energy-from-waste business. They also said there was less credit available for construction firms.

"We struggle to see any scenario, which leaves much, or any value, for the current equity," the Liberum analysts said.

Interserve said its energy-from-waste projects were operational but delays in the third quarter would lower net cash inflow to 15 million pounds from a forecast 32 million pounds.

Expectations for construction firms are the weakest since December 2012, when Britain was still reeling from the global financial crisis, a survey showed this month.

Interserve, which traces its roots to a 19th century firm that moved cargo between ships, had a market valuation of 51.99 million pounds at Thursday's close, after its share price fell 63 percent this year.

(Reporting by Noor Zainab Hussain and Arathy S Nair in Bengaluru and Editing by Saumyadeb Chakrabarty and Edmund Blair)

By Noor Zainab Hussain