15 March 2019 | Martin Read
Interserve shareholders have this afternoon voted against the company's deleveraging plan, meaning that it is now highly likely to go into administration.
Shareholders voted 40.62 per cent for and 59.38 per cent against the firm's deleveraging plan.
The proposed rescue plan would have cut the company's debt by more than half from £650 million to £275 million, while swapping creditors new shares for debt. Lenders would have owned the bulk of the firm with shareholders holding onto 5 per cent.
A statement from Interserve, commenting on the results of today's general meeting, explained that the firm will now "implement an alternative deleveraging transaction, which is likely to involve the company making an application for administration and, if the order is granted, the immediate sale of the Company's business and assets (i.e. the entire Group) to a newly-incorporated company, to be owned by the existing lenders. The transaction would achieve substantially the same balance sheet and liquidity outcomes for the Group as the Deleveraging Plan."
The alternative transaction will be implemented "very quickly and the administration and sale is [sic] expected to be completed this evening", with the assurance that the business will "continue to operate as normal for customers and suppliers".
Ordinary shares will be immediately suspended from trading on the London Stock Exchange.
The board had said previously that the deleveraging plan was the best way to ensure employment and guarantee pensions, and the only way to ensure shareholders held onto any part of the business' worth.
The troubled service provider, which employs 45,000 staff in the UK across schools, hospitals and probation services, has been likened to Carillion, which collapsed with £1.5 billion of debt. Many observers expect that this latest development will reignite the already long-running debate on public sector outsourcing.
UPDATE, 2:10pm:
This afternoon, Interserve's board of directors confirmed that it would indeed be applying to the High Court for the company to be placed into administration.
Their expectation is that once administration is confirmed, all of Interserve's assets will be sold to a newly incorporated company controlled by Interserve's existing lenders.
Once this new company is up and running, an alternative deleveraging plan will be implemented, to achieve "substantially the same commercial principles as the deleveraging plan".
Completion of this alternative deleveraging transaction is anticipated to occur shortly after the completion of the sale of the Group.
In a statement, Interserve's board said that it believed this to be "the best remaining option to preserve value, protect the jobs of employees and ensure the Group can carry on as normal with minimal disruption".
UPDATE, 6:05pm
Administrators have now been appointed, as per the suggested plan of action outlined in our last update - and the sale of Interserve to its lenders has already been completed.
In its latest statement, the newly-owned company said that it is "business as usual for employees, customers, suppliers, and other stakeholders".
The sale of the Group was completed "immediately following the appointment of the administrators", thus "minimising any disruption to the business, providing continuity for customers and suppliers, and protecting the Group's employees (including the beneficiaries of the Group's pension schemes)".
Debbie White, CEO of Interserve Group, was quoted in the company's statement as follows:
"With a stronger financial platform in place, Interserve will be able to concentrate on delivering value for our customers.
"The Group's transformation programme will continue, focused on improving our value propositions for customers, standardising our operational delivery, making Interserve simpler and more efficient through our Fit for Growth initiatives, and embedding a culture of ownership and openness throughout the Group.
"Interserve is fundamentally a strong business and with a competitive financial platform in place we see significant opportunities ahead as a best-in-class partner to the public and private sector."