Interserve rebuffs Coltrane proposal as fears grow over future of outsourcer
Coltrane favours an alternative restructure.
Outsourcing giant Interserve has rejected a revised restructuring package tabled by one of its key shareholders, renewing fears that the firm could collapse.
Interserve said on Tuesday a proposal received from New York hedge fund Coltrane, which owns more than 27% of the firm, would risk the future of the company together with “its employees, pensioners, customers and suppliers”.
It would also require Interserve to immediately halt the implementation of its previously announced deleveraging plan, which will see existing investors almost wiped out with their holdings slashed to 5%.
Coltrane favours a restructure that would see investors end up with 35% control of Interserve.
But Interserve said it was unable to consent to the revised terms.
It is the only plan today that provides a certain future for Interserve, preserving some value for shareholders while securing jobs, pensions, and continuity of services Glyn Barker, Interserve chairman
Interserve chairman Glyn Barker said: “The proposed deleveraging plan, recommended by the board, is the result of a long period of intensive negotiation to align stakeholders behind a plan to strengthen the balance sheet and secure a strong future for the business.
“It is the only plan today that provides a certain future for Interserve, preserving some value for shareholders while securing jobs, pensions, and continuity of services.”
The Government contractor is grappling with a near-£650 million debt mountain and shareholders are set to vote on its proposal on March 15.
The group, which holds crucial contracts for a range of services in prisons, schools and hospitals, is also proposing to issue £435 million of new equity as part of the arrangement.
If a deal is approved, Interserve’s net debt will be substantially reduced, putting the firm on a more secure financial footing.
However, if the firm fails to reach a restructuring agreement, it has lined up EY to act as administrator, raising fears of a Carillion-style collapse for its 25,000 UK workers.
Coltrane reacted angrily to the first proposal and called for the entire Interserve board to be removed, apart from chief executive Debbie White.
Interserve said that it has asked Coltrane for its consent to share the proposal with lenders, but this request has been refused.
But a source close to Coltrane said on Tuesday: “This is a disappointing response.
“We have made clear to the company our desire for constructive discussions and a consensual outcome.
“Of course we will need to speak to lenders, but we need first to understand the company’s views on our proposal – and the board have a duty to consider it, which they are currently failing to fulfil.
“We have offered to make our proposal binding, subject to diligence – but need the company to be more forthcoming with information for that to happen.
“The only way to achieve a consensual outcome is for the board to take their responsibilities seriously, and engage with us on our manifestly better proposal.”
Interserve shares were trading 13% higher on Tuesday at 17.82p.
Mr Barker added: “In the absence of any other plan that is capable of implementation, further uncertainty continues to risk an outcome in which there is no return to shareholders, including Coltrane, and considerable disruption to the business.”