Interserve’s biggest shareholder issues a challenge to swing Rescue Deal in existing shareholder’s Favour

 
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Saturday, 23 March 2019

Interserve’s biggest shareholder issues a challenge to swing Rescue Deal in existing shareholder’s Favour

Interserve Plc’s biggest shareholder, which last week threatened to sue the company over its last “Deleveraging Plan”, has written to the board to propose new terms for the restructuring of the Company’s Debts.

The US Hedge Fund, Coltrane Asset Management; a 27% Shareholder, has been opposing Last month’s agreed terms with Lenders that would push existing shareholders out of the group to the tune of 97.5%, arguing that the lenders would be handed the company’s equity.

The latest action taken by Coltrane Asset Management follows an improved rescue plan proposed by Interserve Plc’s Board last week that would see existing shareholders retain a 5% share in the company, instead of 2.5% as part of a Debt-for-Equity Deal.

Yesterday, (Monday 4th March) the New York-based Hedge Fund wrote to the Board with an alternative Rescue Plan, Interserve later issued a Statement confirming the receipt of this proposal and that the Board would be considering this new proposal.

“A further announcement will be made in due course. In the meantime, the board remains committed to achieving a consensual deleveraging plan,” Interserve said in a press statement.

The Hedge Fund, owned by financier Mandeep Manku, suggested in this new deal, the issuance of at least £110m of new shares in the company, to be offered to shareholders pro rata and underwritten by Coltrane Asset Management. This deal would see the same amount of Debt: £435M of Interserve’s £631.2M converted into equity, handing lenders 55% of the Company and Existing Shareholders 37.5%.

In addition, Coltrane Asset Management would offer the company a short-term loan of up to £75M, to help meet the company’s present financial commitments.

Chief executive Debbie White is scheduled to hold meetings with the firm’s major shareholders in the coming weeks with the intention of securing 50% approval of her own plan at a vote on 15 March, which would be needed for the plan to be actioned.

In an interesting turn of events, another meeting is now due to take place on March 26 to consider Coltrane’s initial proposal, to discuss the issue and underwriting of the £75M loan and to weigh up Coltrane’s call for eight company directors to be replaced, with the exception of CEO Debbie White.

If Interserve cannot pass a Rescue Plan, it will go into pre-pack administration which will be handled by EY.

Interserve Group currently employs 45,000 staff in the UK and 75,000 worldwide. Interserve has a market value of £20m, down from £500m in 2017, and a turnover of £3.2bn.


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