Shares in outsourcer Interserve were up 16 per cent this afternoon as investors continue holding their breath for a rethink of its emergency financial rescue plan.
The firm is expected to publish an updated version of the plan tomorrow morning after its biggest shareholder, Coltrane Asset Management, demanded it make changes on Thursday night.
Coltrane, which holds 27.7 per cent of the firm, sparked weeks of internal chaos at Interserve as it rebelled earlier this month against the outsourcing giant’s initial proposal to hand 97.5 per cent of its market value to lenders including RBS, BNP Paribas and HSBC, as well as rival hedge funds Emerald Investment and Davidson Kempner.
The hedge fund demanded the outsourcer’s entire board step down, except for chief executive Debbie White, who is said to be the architect of the plan.
The new suggestion involves quadrupling existing shareholders’ stake to 10 per cent, while offering 65 per cent to the lenders and offering investors a further 25 per cent of equity via a rights issue.
A source close to Coltrane told City A.M. on Friday: “The company is proposing to double the money of its hedge fund creditors whilst wiping out shareholders. This proposal stops that obscenity and brings borrowings below what the company has suggested with new money.”
The source added Coltrane was expecting Interserve to “meet them in the middle” on the update.
But another source on Interserve’s side insisted the plan would not involve bowing to shareholder pressure purely to appease the hedge fund.
On Friday, Interserve announced it would “publish shareholder documents next week which will include the notice of a general meeting of Interserve at which shareholder approval of the deleveraging plan will be sought. The documents will also set out the full terms of the deleveraging plan.
“The board confirms that it remains committed to achieving a consensual deleveraging plan.”
A general meeting is currently expected in mid-March, at which Interserve needs 50 per cent shareholder approval of the refinancing deal for it to pass.
Coltrane holds 27.7 per cent of Interserve’s shares, while another hedge fund, Farringdon Capital Management, which owns 6.2 per cent of Interserve, also publicly threw its weight behind Coltrane’s rebellion earlier this month. If the plan stays in its current state, it is likely to meet rejection from at least one-third of voters.
Farringdon has thus far remained silent on Coltrane’s renewed proposal.