Interserve rejects rebel shareholder’s plan
Interserve has rejected an alternative rescue plan put forward by its largest shareholder, Coltrane Asset Management, arguing that its own deleveraging plan is the only one that can be implemented.
The company was responding to the publication yesterday of Coltrane’s new alternative proposal, which would see shareholders left with more equity in Interserve than under the deleveraging plan backed by the contractor’s board and its lenders.
Coltrane’s proposal would involve the issue of at least £110m of new shares in the company, to be offered to shareholders pro rata and underwritten by Coltrane. The new issue and the conversion of £435m of debt in the company into equity would leave existing creditors owning 55% of the business, and shareholders with 37.5%
Interserve’s deleveraging plan would raise £435.2m through the placing of new shares which will provisionally be placed with the company’s lenders and leaving shareholders with only 5% of the company.
Responding to Coltrane’s proposal in a statement, Interserve said: “The Coltrane Proposal requires the consent of the lenders, bonding providers and pension trustee to be capable of implementation. The board has asked Coltrane for its consent to share the Coltrane proposal with these parties and their advisors, but this request has been refused despite the fact that the key terms of their proposal have been made public by Coltrane. The ability to obtain lender support for a materially different deal requiring lenders to take significantly larger write offs, or provide ongoing support, in the short time frame available is therefore unknown.
“The Coltrane proposal requires that the Board immediately halt the implementation of the deleveraging plan that was launched on 27 February 2019 and that is subject to shareholder approval on 15 March 2019. In light of the Company’s short-term liquidity requirements and given that Interserve’s deleveraging plan is currently the only fully funded proposal which has the agreement of lenders, bonding providers and pension trustee, the board is unable to consent to this request without risking the future of Interserve together with its employees, pensioners, customers and suppliers.”
Interserve urged shareholders to vote in favour of its deleveraging plan, which it said was “the only plan that is capable of implementation in order to provide sufficient liquidity, cash and bonding facilities to allow the group to service short term obligations”.
Glyn Barker, chairman of Interserve, said: “This is a critical time for Interserve. 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. 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.
“The board considers the deleveraging plan to be in the best interests of Interserve and all its stakeholders, including shareholders, as a whole. Accordingly, the board continues to unanimously recommend that shareholders support the deleveraging plan and vote in favour on 15 March.”