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Interserve set for pre-pack administration if debt deal fails - source

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Interserve set for pre-pack administration if debt deal fails - source
FILE PHOTO: The Interserve logo is seen on a flag at Interserve offices in Twyford, Britain January 17, 2018. REUTERS/Peter Nicholls/File Photo   -   Copyright  Peter Nicholls(Reuters)
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LONDON (Reuters) – Banks for Interserve have lined up a so-called pre-pack administration that will wipe out existing shareholders but enable the troubled outsourcer to keep operating, a person familiar with the situation said on Saturday.

Seeking to avoid a collapse like rival Carillion, the plan would come into force if investors reject Interserve’s debt-for-equity swap at a vote on Friday.

The British company, which employs 68,000 people globally to provide cleaning and building services, is fighting for survival after struggling to service debt due to project delays, a weak construction market and a mistaken push into the energy-from-waste market.

A pre-pack administration enables the company to sell itself or its assets before it appoints administrators who take over the running of the business to protect creditors.

Interserve struck a deal in February under which existing shareholders would retain 5 percent of the group while creditors take control.

However its biggest shareholder Coltrane Asset Management has objected to the deal and a vote will take place on Friday.

Interserve declined to comment but the company’s chairman, Glyn Barker, told the Telegraph newspaper on Saturday that Coltrane would be to blame if the company has to opt for a pre-pack deal.

“If we lose that vote because of Coltrane, then it will be because of Coltrane that shareholders get nothing out of this,” he said.

(Reporting by Kate Holton; Editing by Kirsten Donovan)

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