Tue, 12 Mar 2019 | ADMINISTRATION
Thought to be one of the UK’s largest providers of public services, Interserve is calling its shareholders to support the financial rescue deal, or risk the company entering administration.
Only last month, Interserve reached a conclusion with its creditors to avert bankruptcy. However, if shareholders decline the debt-for-equity exchange deal – which will be put to a vote on Friday– the business’s lenders will be pushed into applying for a pre-pack administration.
The financial rescue deal has been designed by a handful of major UK players, including hedge funds, RBS and HSBC, which will aim to reduce the company’s current £631 million debt to £275 million by issuing new shares and granting 95 per cent of the firm to lenders.
In the event of the deal being rejected, a pre-pack administration will allow Interserve to sell the company or its assets before appointing administrators from Ernest & Young to take over management to protect creditors. In this scenario, lenders will own 100 per cent of the firm.
It is anticipated that no company contracts will be interrupted, or any jobs terminated, in the case of a pre-pack administration.
Chairman of Interserve, Glynn Barker, commented on the company’s tenuous situation, saying: “People shouldn’t assume that there are months or even weeks left without additional borrowing facilities. If we lose [the vote], we run out of liquidity.”
Established in 1884 as the London and Tilbury Lighterage Company Limited, Interserve today provides a range of services across the country, in construction, healthcare and catering for government and professional industries. In addition to this, the company is also England and Wales’ largest provider of probation services to 40,000 “medium-low risk offenders” in a contract with the Ministry of Justice.
Interserve’s future will be decided after the vote on Friday, 15 March 2019.
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