A General Meeting held today to vote on the Interserve Board’s Deleveraging Plan which was aimed at strengthening Interserve’s balance sheet and secure a strong future for the business has been rejected by investors.
A General Meeting held today to vote on the Interserve Board’s Deleveraging Plan - which is a plan to strengthen Interserve’s balance sheet and secure a strong future for the business.
Ahead of the General Meeting, the Board had described the company as being in “a critical financial situation” and the Deleveraging Plan as “the only plan today that is capable of implementation in order to provide balance sheet strength and cash liquidity to allow the Group to meet its financial obligations and provide stability for the future.”
The Plan was intended to reduce Interserve's debts, deliver a much stronger financial position and enable the struggling Group to compete for new work on an equal footing with competitors.
However, today’s Meeting saw over 59% of investors reject the Plan – and the Interserve board of directors has convened an urgent board meeting to consider its options. In the absence of any viable alternative, the company will consider making an application for administration.
If the order is granted, this would result in the immediate sale of the company's business and assets i.e. the entire Group - to a newly-incorporated company, to be owned by the existing lenders.
A statement issued by Interserve said:
“The alternative transaction will be implemented very quickly and via a carefully-managed process and the administration and sale is expected to be completed this evening, ensuring that the business will continue to operate as normal for customers and suppliers.“
“ It will provide the Group with a strong financial position, allowing it to grow and develop the business, to deliver on its long-term strategy and protect the Group's employees (including the beneficiaries of the Group's pension schemes).”
The company’s ordinary shares were immediately suspended from trading on the main market for listed securities of the London Stock Exchange following the vote.
Interserve has gross revenues of circa £3.2 billion and a workforce of circa 68,000 people worldwide.
However, despite rejection of the debt-for-equity swap plan with Interserve's lenders that would have seen investors' holdings fall to just 5%, the expectation is that the future of the 45,000-strong UK workforce should be secure.
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