US hedge fund Coltrane Asset Management, which holds a 27.7% stake in Interserve, floated the prospect in a letter to the company’s would-be administrators EY, according to Sky News.
READ: Interserve and Kier in strife as collapse of rival Carillion continues to weigh on industry sentiment
Coltrane also urged EY against a pre-pack insolvency deal that would hand lenders control of the business.
It demanded EY conduct a comprehensive marketing process for Interserve and its assets.
Shareholders will on Friday vote on a rescue deal that will see lenders write off their debt in exchange for equity from retail investors, who own about 30% of the business combined.
If approved, it would see existing shareholders own just 5% of Interserve.
Coltrane plans to vote against the debt restructuring without a substantial improvement to the existing plan but Interserve has the backing of several other major stakeholders.
The hedge fund has been in a long-running power struggle with Interserve’s board.
It wants to oust most of the company’s board members and has threatened to sue them over a “catastrophic” loss of market value.
Interserve’s shares have plunged 88% over the past year.
The construction, cleaning and catering contractor’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.
In afternoon trading, shares were down 5.3% to 13.4p.