Interserve’s largest shareholder has warned the outsourcer’s would-be administrator against arranging a pre-pack insolvency deal that would hand total control to the firm’s lenders, in the event the firm goes bust on Friday.
Coltrane Asset Management, a US hedge fund that holds a 27.7 per cent stake in the outsourcer, has written to EY, which is lined up to handle a potential administration, to demand it considers all interested parties, not just Interserve’s bankers.
Interserve faces a crunch shareholder vote on Friday, in which it needs 50 per cent of voters to back a controversial rescue deal, otherwise the firm goes into a pre-pack.
A source close to the hedge fund told City A.M. Coltrane has written to EY saying “they would have a duty to market the company to all interested parties – not just the lenders – in an administration”.
Coltrane hired Enyo Law, a specialist disputes firm, to represent it, and the law firm had sent the letter to demand EY conducts a rigorous and comprehensive marketing process for the outsourcer and its assets.
The story was first reported by Sky.
Coltrane’s move is the latest in a long-running power struggle with Interserve’s board, after the debt laden outsourcer published a rescue deal which would reduce shareholders’ stake in the company to just five per cent.
The hedge fund was so incensed by this dilution of control that it threatened to sue Interserve’s board to hold them personally accountable for the company’s “catastrophic” loss of value.
Interserve’s shares have fallen 88 per cent in the last year.
But despite resistance from its largest investor, the board has still won the backing of several major players who could help force the vote through.
Last week, City A.M. revealed Aberdeen Standard Investments, which controls 4.6 per cent of Interserve’s shares, was backing the firm’s rescue deal.
Read more: Interserve battles to avoid administration
Also advising investors to vote for the deal are three proxy shareholders, Glass Lewis, Pensions and Investment Research Consultants, and Institutional Shareholder Services.
MPs are expected to raise the company’s plight in parliament this week.