There was more misery for Interserve investors on Monday as shares plummeted nine per cent in morning trading, after chairman Glynn Barker said the firm’s controversial proposed rescue deal is the “only viable option”.
The debt-laden outsourcer put forward a renewed rescue plan last week which doubles investor control, with five per cent of the firm’s equity going to existing shareholders, while the remaining 95 per cent will initially be handed over to the firm’s lenders – RBS, BNP Paribas, HSBC.
But shareholders with more than a third of voting rights have already indicated they will reject the deal. If the debt-laden outsourcer cannot pass the plan, it will go into a pre pack administration which will be handled by EY.
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.”
He added: “At the time of writing the directors of Interserve have not received any other proposal which is capable of implementation during the time available.
“Any alternative proposals would of course need the support of our lenders.”
Coltrane Asset Management, a US hedge fund with 27 per cent of the votes, threatened to sue Interserve over the deal last week, launching a virulent attack on way the board has managed the outsourcer.
Shares eventually recovered to 16.9p this morning, around five per cent below Monday’s opening price of 17.6p.
Last week’s proposal is an improvement on the 2.5 per cent offered at the start of February, but is still a “terrible” deal for shareholders in the eyes of Coltrane’s managing partner Mandeep Manku.
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.