Published: Sat, March 16, 2019
Finance | By Loren Pratt

Interserve to file for administration after rescue plan rejected

Interserve to file for administration after rescue plan rejected

Interserve, which employs 45,000 in the United Kingdom, has lined up EY to carry out a pre-pack administration, after which the firm will fall into the hands of its creditors.

Investors in Interserve - which holds crucial Government contracts for a range of services in prisons, schools and hospitals - voted against its proposal at a meeting.

The pre-pack process will allow it to avoid a Carillion-style collapse, to the relief of Government.

The business will continue to operate "as normal for customers and suppliers", it said, but shares will be suspended from trading on the London Stock Exchange immediately.

Ahead of Friday's vote, Sky News reported that Coltrane had written to EY to urge them against a pre-pack insolvency deal.

Interserve investors include RBS, HSBC and BNP Paribas - together with Emerald Asset Management and Davidson Kempner Capital.

Interserve said it would now convene an urgent board meeting to consider the company's options.

Interserve fears
Interserve looks set to avoid a Carillion-style collapse

Existing shareholders would have been left with just 5pc of the group.

Government contractor Interserve is to go into administration after its largest shareholder, the United States hedge fund Coltrane, led a rebellion against financial restructuring plans drawn up by the company's lenders.

The construction, cleaning and catering contractor's ill-fated move into creating energy from waste resulted in hefty losses and contributed to a net debt of £630mln.

The collapse has sparked anger from the unions.

"Ministers have learned absolutely nothing from the Carillion fiasco and are hell-bent on outsourcing public sector contracts".

'Shambolic mismanagement is putting jobs on the line and services in jeopardy.

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. It said: 'By being forced into administration the entire workforce is facing an uncertain future. It is unclear how civil servants at the Cabinet Office, which was in regular contact with the firm as it drew up the original rescue deal over Christmas, would feel about a USA hedge fund overseeing British public services. It adds it is in close contact with the company and is "confident a positive way forward will be found".


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