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Interserve faces administration after shareholders shun rescue deal

15 March 2019 | By Neil Gerrard

Interserve’s shares have been suspended and it faces the prospect of a pre-pack administration as early as this evening after its shareholders rejected a rescue plan backed by the board and the company’s lenders.

The result follows a crunch general meeting earlier today, which saw 59.4% of shareholders vote against the plan.

Interserve said its directors would now apply for the company to be placed into administration.

In a statement to the City it said: “In the absence of any viable alternative, it expects to implement an alternative deleveraging transaction, which is likely to involve the company making an application for administration and, if the order is granted, the immediate sale of the company's business and assets (i.e. the entire group) to a newly-incorporated company, to be owned by the existing lenders.

“The alternative transaction will be implemented very quickly and via a carefully-managed process and the administration and sale is expected to be completed this evening, ensuring that the business will continue to operate as normal for customers and suppliers.  It will provide the group with a strong financial position, allowing it to grow and develop the business, to deliver on its long-term strategy and protect the group's employees (including the beneficiaries of the group's pension schemes).”

After the sale of the group to the new company, Interserve plans to implement an alternative deleveraging plan.  The deal will see around £485m of existing debt swapped for shares in the new company and the provision of an £110m of additional liquidity to the group.  

The move will 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 their stake diluted down to 5%.

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