Interserve saved after deal rejected

Interserve saved after deal rejected

Interserve PLC (LON:INVP) is to enter into administration after shareholders voted against the outsourcer's rescue plan at an emergency meeting on Friday.

The troubled outsourcer, which employs 45,000 people in the United Kingdom to clean schools and hospitals, run probation services and build roads and bridges, had been battling to avoid a collapse like Carillion after it hit trouble about three years ago.

An Interserve spokesman told Reuters the company's lenders had already set up a company with a shadow board ready to buy Interserve's assets.

The firm has sought to reassure workers that as far as possible it will be business as usual as the director and lenders spend the weekend completing their plan B created to allow the business to continue to operate as normal for customers and suppliers.

The pre-pack will be managed by accountancy giant EY and is expected to be completed on Friday evening.

The move would effectively wipe out Interserve's shareholders, who were voting on a proposed debt for equity swap that would have left lenders with 95% of the business and the shareholders' stake diluted down to 5%.

However, New York hedge fund Coltrane, Interserve's largest shareholder with more than 27%, dismissed the plan, which was eventually rejected by over 59% of shareholders.

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Interserve has been hampered by high debts, construction delays and a failed foray into the energy-from-waste market.

Kevin Brandstatter, GMB national officer, said: 'Ministers have learnt absolutely nothing from the Carillion fiasco and are hell-bent on outsourcing public-sector contracts.

Interserve provides services such as maintaining and cleaning schools, railway stations, Whitehall offices and hospitals.

The investor demanded EY conduct a comprehensive marketing process for the firm and its assets while raising the possibility it would explore a takeover bid.

The UK's Cabinet Office said the announcement "will not affect jobs or the provision of public services delivered by Interserve". It said: 'By being forced into administration the entire workforce is facing an uncertain future.

'We are in close contact with the company and we are confident a positive way forward will be found'.

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