The rebellious shareholder trying to thwart outsourcing giant Interserve’s rescue deal has upped its stake in the firm, "putting its money where its mouth is" and piling more pressure on the contractor.
Coltrane Asset Management, a 27.3 per cent stakeholder which previously owned only 17.5 per cent through shares and 9.8 through other financial instruments, launched a bid earlier this month to oust all members of the outsourcer's board except chief executive Debbie White after the firm announced the details of a deleveraging plan with its lenders.
Now it has bought another 10.2 per cent of the firm’s shares – offloading the financial instruments – meaning it now holds 27.7 per cent of the company’s voting rights through publicly traded shares.
This comes just as another shareholder – Goldman Sachs – sold practically its whole stake in the company, amounting to 9.14 per cent of Interserve shares.
David Madden, analyst at CMC Markets, said Coltrane appears to have bought the shares from Goldman.
By taking more control, “Coltrane is trying to put the kibosh on Interserve’s plan to wipe out shareholders,” he told City A.M..
Interserve’s rescue deal stoked fury at Coltrane earlier this month because it proposed all but wiping out existing shareholders’ stake in the outsourcer, whittling it down to just 2.75 per cent, while lenders including RBS, HSBC and BNP Paribas will be handed control.
Coltrane subsequently wrote to the firm demanding a general meeting, and calling for the heads of directors Glyn Barker, Mark Whiteling, Russell King, Anne Fahy, Nick Salmon, Gareth Edwards, Dougie Sutherland and Nicholas Pollard. It said Interserve should replace them with two rescue specialists, David Frauman and Stuart Ross.
Then, Dutch hedge fund Farringdon Capital Management, which owns 6.2 per cent of Interserve, also threw its weight behind the rebellion.
Bram Cornelisse, chairman of Farringdon, told City A.M. the fund is “supporting the efforts of Coltrane to achieve a more equitable outcome for shareholders compared to the deal suggested by management which hands almost the entire company to the debt holders”.
A well-placed source added Farringdon has also written directly to the outsourcer on the matter.
Michael Van Dulken, analyst at Accendo Markets, added of Coltrane's purchase: "They're putting their money where their mouth is and decided to own the shares outright."
A vote will now take place in March, in which Interserve needs the support of half its shareholders to go ahead with the rescue deal. Coltrane and Farringdon’s combined stake is around one-third.
Interserve declined to comment.
Debbie White, chief executive of Interserve and the architect of the rescue deal, continues to have shareholders' backing, according to the firm.
Workers at the NHS and the Foreign Office are among Interserve’s 45,000 UK employees, and 70 per cent of its annual £3.2bn turnover comes from the government. Among its contracts, it carries out maintenance on 1,100 offices and depots for the Department of Transport. It also provides school meals, facilities management and construction work.