The major government contractor Interserve is to enter administration after shareholders voted in favour of rejecting the firm’s second rescue plan.
In an extraordinary general meeting held today, 60% of shareholders voting against the the board’s Deleveraging Plan that was put on the table before them.
From the outset, the board said the plan was aimed at reducing the company’s debts, delivering a much stronger financial position and enabling the firm to compete for new work on an equal footing with competitors.
The deal would have seen shareholders keep just 5% of the company, with lenders splitting the rest between themselves.
But the firm has never managed to attain the backing of US hedge fund Coltrane Asset Management, which owns 28% of the firm and from the start has been against the financial restructuring plans on the table.
Attempting to provide some reassurance, Interserve say they expect the administration and sale to be completed this evening so that it ensures the “business will continue to operate as normal for customers and suppliers".
In an update, the firm said: "The board of directors of the company is convening an urgent board meeting to consider its options. In the absence of any viable alternative, it expects to implement an alternative deleveraging transaction, which is likely to involve the company making an application for administration and, if the order is granted, the immediate sale of the company's business and assets (i.e. the entire group) to a newly-incorporated company, to be owned by the existing lenders.”
Accountants EY are expected to be appointed as administrators and will then sell the company for a nominal amount to the current lenders who will own 100% of the new company. It is not anticipated there will be any changes to underlying contracts or immediate job losses, in the event of administrators taking over.