Interserve is urging shareholders to back a rescue deal in a vote on Friday or the company could face administration.
READ: Interserve’s confirms largest shareholder proposed new terms for its rescue restructuring but says its plan the only way forward
The construction, cleaning and catering contractor is trying to gain support for a proposal that would see lenders write off their debts in exchange for equity from retail investors.
The group’s ill-fated move into creating energy from waste resulted in hefty losses and contributed to a massive net debt of £630mln.
Interserve is one of the government’s largest contractors. Its contracts with the government include cleaning and maintenance for schools, hospitals and railway stations, as well as work for the Ministry of Defence and the Armed Forces.
Kier, which has contracts for major construction projects in Britain, including London’s Crossrail link, has also had a troublesome time of late.
On Monday, the company disclosed an accounting error that pushed up its debt for 2018, just two months after its chief executive stepped down following a disappointing rights issue.
Kier said its debt for the year was £180.5mln, compared to the £130mln announced in January.
In January, the construction firm’s chief executive Haydn Mursell resigned after many shareholders refused to buy into a new issue of stock a month earlier.
Just 38% of the rights issue shares were taken up by shareholders, leaving underwriters to pay out the bulk.
Kier said the rights issue was hit by the fact that bankers have cut their exposure to the industry after becoming more pessimistic following the collapse Carillion.
In Monday lunchtime trading, shares in Kier were down 12.4% to 435.2p and Interserve shares dropped 8.2% to 13.4p.