Outsourcer Interserve has rebuffed attempts by its biggest shareholder to hijack a rescue deal designed to stop the firm going into administration.
Coltrane Asset Management, US hedge fund which owns 27.7 per cent of Interserve, on Monday put forward a counter-proposal to Interserve’s own controversial rescue deal which suggests handing 95 per cent control of the firm to lenders, City A.M. revealed.
After initially reacting angrily to the dilution of shareholder value to just five per cent in Interserve's plan, and threatening to sue the firm’s directors for their handling of the matter, Coltrane's new set of demands involved giving investors 35 per cent control.
But this afternoon, Interserve said it could not consent to Coltrane’s request “without risking the future of Interserve together with its employees, pensioners, customers and suppliers”.
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. If a deal does not pass at a shareholder vote on 15 March, Interserve will go into a pre pack administration.
Coltrane, which is led by US financier Mandeep Manku, has refused to let Interserve share details of the plan with the outsourcer’s lenders, bonding providers and pension trustees, it added, despite making the key points public on Monday.
“The ability to obtain lender support… in the short time frame available is therefore unknown,” Interserve said.
“The board also notes that the Coltrane Proposal is non-binding and unfunded and remains subject to due diligence. There is therefore no certainty that Coltrane's proposal could be successfully implemented.”
Chairman Glynn Barker said this is a “critical time” for Interserve. The company’s proposed rescue deal is “the only plan today that provides a certain future for Interserve, preserving some value for shareholders while securing jobs, pensions, and continuity of services,” he said.
“In the absence of any other plan that is capable of implementation, further uncertainty continues to risk an outcome in which there is no return to shareholders, including Coltrane, and considerable disruption to the business.”
A source close to Coltrane told City A.M.: “This is a disappointing response. We have made clear to the company our desire for constructive discussions and a consensual outcome. Of course we will need to speak to lenders, but we need first to understand the company’s views on our proposal – and the board have a duty to consider it, which they are currently failing to fulfil.
“We have offered to make our proposal binding, subject to diligence – but need the company to be more forthcoming with information for that to happen. The only way to achieve a consensual outcome is for the board to take their responsibilities seriously, and engage with us on our manifestly better proposal.”
Interserve’s share value fell seven per cent on Monday afternoon on the announcement.
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 the 15 March vote.