LONDON (Reuters) – The future of the troubled British outsourcer Interserve will be decided on Friday when investors vote on whether to accept a rescue deal or let the provider of key public services fall into administration.
The British company, which employs 68,000 people globally to clean schools and hospitals, run probation services and build roads and bridges, has been battling to avoid a collapse like peer Carillion after it hit trouble about three years ago.
On Friday, shareholders will vote on whether to accept a debt-for-equity swap which would see creditors take control in exchange for writing off 485 million pounds of debt and injecting 110 million pounds of new liquidity. Existing shareholders would be left with 5 percent of the group.
The outcome of the vote appears too close to call after the company’s biggest shareholder Coltrane Asset Management objected to the deal. It holds 28 percent of the stock.
“The company is in a critical financial situation,” the group said when explaining the deleveraging plan.
“Our plan preserves some value for shareholders. This will not be the case if the proposals are voted down.”
A person familiar with the situation has told Reuters that if the deal fails the company will go for a so-called pre-pack administration that will wipe out all existing shareholders but enable the company to keep operating by selling some assets.
Interserve, one of Britain’s biggest outsourcing and construction companies, has been thrust into a fight for survival after it made an ill-fated push into the energy-for-waste market.
Broader problems in the outsourcing market and high debt also rattled investors, driving its shares down from 500 pence in 2014 to 9.6 pence now.
Its former rival Carillion collapsed in January 2018 in Britain’s biggest corporate failure that hit the provision of school meals and the construction of hospitals.
The Interserve meeting will be held at 1100 GMT on Friday.
(Reporting by Kate Holton, Editing by Paul Sandle)