Proactive Investors - Run By Investors For Investors

Interserve sweetens terms of rescue package as it looks to win over angry shareholders

Interserve has been forced to act after a third of shareholders, including Coltrane, fiercely opposed the first deal, putting Interserve’s recovery plan in jeopardy and risking a Carillion-style collapse
Interserve’s £20mln equity value is dwarfed by its £650mln debt-pile

Interserve PLC (LON:IRV) bosses have sweetened the terms of a rescue deal in a bid to end a stand-off between lenders and key shareholders.

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.

READ: US short seller throws spanner into Interserve’s rescue plans

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.

View full IRV profile View Profile

Interserve Timeline

Related Articles

Online payment
June 12 2019
The company's payment services specialise in card-not-present transactions, payments made without face-to-face contact or verification, usually online or via mobile
Investment papers and laptop
May 07 2019
The investment firm focuses on providing consultancy services to universities and other research organisations to help them commercialise any intellectual property arising from their research
March 29 2019
RMS is taking action to address the issues at Geocurve and looks forward to “renewed growth in sales to new clients” while it remains "excited by the opportunities at GyroMetric"

© Proactive Investors 2019

Proactive Investors Limited, trading as “Proactiveinvestors United Kingdom”, is Authorised and regulated by the Financial Conduct Authority.
Registered in England with Company Registration number 05639690. Group VAT registration number 872070825 FCA Registration number 559082. You can contact us here.

Market Indices, Commodities and Regulatory News Headlines copyright © Morningstar. Data delayed 15 minutes unless otherwise indicated. Terms of use