Just days before shareholders decide the fate of the company, Interserve bosses have reaffirmed how a rescue plan currently on the table is the only one that will provide stability moving forward.
This Friday (15 March) is the date for a pivotal vote on the board’s Deleveraging Plan – an effort put in place to strengthen Interserve’s balance sheet.
The message from Interserve has been clear from the start that this is the plan to reduce the company’s debts, deliver a much stronger financial position and enable the firm to compete for new work on an equal footing with competitors.
Shareholders will be voting on a deal that would see shareholders keep just 5% of the company, with lenders splitting the rest between themselves. While the firm has managed to achieve the backing of many shareholders, it continues to fail in reaching an agreement with Coltrane Asset Management, which owns 28% of the firm.
Last week the support services and construction group rejected a revised restructuring deal tabled by Coltrane with its chairman Glyn Barker claiming the proposal would jeopardise the future of the company and all its staff.
The revised deal put in place by the US shareholder, are believed to be in favour of a restructure that would see investors end up with 35% control of Interserve.
Troubles for the firm have been brought about by incremental cash costs from Energy from Waste contracts, delays in collecting receipts from certain Middle Eastern customers and exceptional costs sustained on a number of construction projects.
Interserve say that if shareholders do not back the plan then it has taken steps to prepare for an alternative transaction to protect the business. However, it’s believed the accounting firm EY will take over as administrator.
Bosses say an alternative outcome is one they would “much prefer to avoid” as it would likely result in no return for shareholders and end up being much “more costly and disruptive”.
Speaking about the plan, Interserve chairman Barker said: “The company is at a critical financial situation. The deleveraging plan is the result of months of intensive negotiations with lenders, bonding providers and the pension trustee. Our plan preserves some value for shareholders. This will not be the case if these proposals are voted down. It is the only plan with the support of all our lenders and the pension trustee. It’s a plan that secures 68,000 jobs, pensions and public services.”