Interserve has announced that it will publish details of a rescue plan for the business this week.
In an announcement to the London Stock Exchange on Friday (22 February), the company also said it would set the date for a general meeting at which it will seek shareholder approval of the plan.
Meanwhile, the company confirmed that it is also considering an alternative plan from Coltrane Asset Management, its largest shareholder.
Under the terms of the restructuring plan agreed with its lenders, bonding providers and pension trustee, lenders including hedge funds and banks HSBC, RBS and BNP Paribas will swap £480m of debt in exchange for all but 2.5% of the company’s shares. The deal needs at support from at least 50% of investors to succeed.
But Coltrane and hedge fund Farringdon, which together own 34% of Interserve, are expected to vote against the debt-for-equity swap, which would dilute their stakes.
On Friday, The Guardian reported that Coltrane has instead proposed an alternative that would see only 65% of the company handed to creditors in exchange for £436m of debt. That would instead leave shareholders with 10% of the equity plus the chance to participate in a 25% rights issue worth £75m.
Meanwhile, it was also reported that the lenders have lined up EY to undertake a pre-pack administration of Interserve if talks fail, justifying the move on the basis of a missed £67m debt repayment that fell due in February. That would leave the banks owning the business via a new holding company.
Declining to comment on the Guardian story, an Interserve spokesman said: "The deleveraging plan is a plan that preserves maximum value for employees, pensioners, lenders, suppliers, customers and all shareholders. Alongside the company wide transformation programme ‘Fit for Growth’ it will provide a strong platform for the future growth of the company.”
