Shares in debt-laden outsourcer Interserve surged 27 per cent on Tuesday morning on the news it was considering a counter-proposal on its controversial rescue deal made by its biggest shareholder.
The alternative plan was put forward on Monday afternoon by Coltrane Asset Management, a US hedge fund which owns 27.7 per cent of Interserve. It demands shareholders retain 37.5 per cent of the company, far more than the five per cent suggested in Interserve’s draft rescue deal.
On Monday evening, Interserve responded by saying it was “considering” Coltrane’s proposal.
“A further announcement will be made in due course. In the meantime, the board remains committed to achieving a consensual deleveraging plan,” it added.
City A.M. understands Interserve's further announcement responding to Coltrane’s proposal is due in a matter of hours.
Coltrane’s chief Mandeep Manku will be hoping Interserve’s directors finally yield to the hedge fund’s demands and suggest handing shareholders a much larger stake in the firm than previously offered.
On Sunday evening Interserve’s chairman Glynn Barker said the deal proposed last week by the outsourcer was the “only viable option”.
Barker wrote in the Sunday Telegraph: “I understand that this is very disappointing outcome for shareholders. I say that in both my capacity as chairman and as a fellow shareholder.
“However, those who believe this is a bad deal drastically underestimate the critical financial situation in which the company finds itself.”
When Interserve suggested the new terms on Wednesday which doubled shareholder value to five per cent, Coltrane’s directors were so incensed they threatened to sue the outsourcer, calling it a "terrible" deal.
Workers at the NHS and the Foreign Office are among Interserve’s 39,000 UK employees, and 70 per cent of its annual £2.9bn turnover comes from the government.
Chief executive Debbie White will hold meetings with the firm’s major shareholders in coming weeks in a bid to secure the 50 per cent approval of the plan at a vote on 15 March that is needed for it to go ahead and stop the company going into administration.