Planning and Housing

15.03.19

Interserve to go into administration as rescue deal rejected

One of the largest providers of public services in the UK is to go into administration after its largest shareholder led a rebellion against its financial rescue plan.

Interserve has announced its parent company has applied for administration after its investors rejected the debt-for-equity rescue deal that would have handed control of the company to lenders.

The deal would’ve seen shareholders’ stake reduced to just 5%, and they voted nearly 60% against the plan at an emergency meeting.

Interserve has over 45,000 UK staff and holds contracts for cleaning schools, construction, probation, and healthcare.

In February, Interserve’s CEO Debbie White declared it had made a “significant step forward” as the provider tried to avoid a Carillion-style collapse as a rescue deal was reached with lenders.

But the government contractor’s largest shareholder, US hedge fund Coltrane, led a rebellion against the plans.

The ‘pre-pack’ administration means Interserve can continue trading and the firm says services will continue as normal.

The company said earlier today that the board of directors were convening at an urgent board meeting to consider its options, but has now announced that its parent company has applied for administration.

It said “This is part of an alternative deleveraging transaction which will restore the group’s balance sheet and provide additional liquidity.

“It is envisaged that the administrators, if appointed, will immediately sell Interserve’s business and assets to a new company, to be controlled by Interserve’s lenders.”

Following the sale, the intention is for an alternative transaction to be implemented involving the dividing of £485m of existing debt and the injection of £110m into the group, with the transaction expected to completed on or before Monday 18 March.

Interserve said: “The board believes this is the best remaining option to preserve value, protect the jobs of employees and ensure the group can carry on as normal with minimal disruption.”

Image credit - Steve Parsons/PA Archive/PA Images

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