The beleaguered contractor’s lenders, which include RBS and HSBC, have agreed to swap £485mln worth of debt for a 95% stake in the beleaguered contractor.
That all but wipes out existing shareholders, but the 5% of the company they will be left with is better than the 2.5% they stood to receive under the initial deal.
The banks have also agreed to pump an extra £110mln into the business through a new three-year loan facility, as well as pledging to write off £1 of debt for every £9 converted to equity.
Rescue package in ‘best interests of all’
“The agreement of Deleveraging Plan terms with our lenders, bonding providers and Pension Trustee represents a significant milestone for Interserve,” said chief executive Debbie White.
“Implementation of the Deleveraging Plan is in the best interest of all our stakeholders. The plan provides new liquidity and creates a strong balance sheet, which, alongside our Fit-for-Growth programme, will provide us with a competitive financial structure to continue to improve the business and deliver on our long-term strategy.”
Interserve, which looks after government jobcentres and army bases, hopes the new offer will appease angry shareholders, including its largest investor – New York-based hedge fund Coltrane.
Shareholders to vote on 15 March
The £20mln company needs at least 50% of shareholders to approve the rescue deal at a meeting next month.
It has been forced to act after a third of investors, including Coltrane, fiercely opposed the first deal, putting Interserve’s recovery plan in jeopardy and risking a Carillion-style collapse.
Interserve’s shares have plunged by almost 90% over the past year after it racked up huge debts expanding into areas in which it had little expertise, such as waste-to-energy plants and probation services.
Interserve shares dropped another 11% to 18.4p on Wednesday morning.