The board of troubled contractor Interserve has rejected the latest proposed rescue plan citing “risk of uncertainty to shareholders”.
Coltrane Asset Management, Interserve’s largest shareholder, put forward alternative plans to rescue the company. These involve issuing £110M of Interserve shares underwritten by Coltrane.
The plan was submitted as an alternative to the deleveraging plan put in place by the board in February. The deleveraging plan involves creditors writing off debts in exchange for £480M in new shares.
The Interserve board hopes the debt for equity deal will help it avoid a Carillion-style collapse by reducing its net debt to around from £650M to £275M.
In response to the Coltrane proposal, the Interserve board urged shareholders to continue to back its debt for equity deal, which it said is the only deal that will enable the company to keep its short term commitments and offer a stable business platform.
“The deleveraging plan is the only plan that is capable of implementation in order to provide sufficient liquidity, cash and bonding facilities to allow the group to service short term obligations and secure a stable platform for the business,” the board said in an update.
However, the board said it “remains open” to other plans which could deliver “liquidity and a deleveraging solution that is capable of implementation in the time frame available”.
Interserve chairman Glyn Barker said it was a critical time for the company and urged all stakeholders to continue backing the board’s plans. “This is a critical time for Interserve. The proposed deleveraging plan, recommended by the board, 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.
“The board considers the deleveraging plan to be in the best interests of Interserve and all its stakeholders, including shareholders, as a whole. Accordingly, the board continues to unanimously recommend that shareholders support the deleveraging plan.”
Interserve shareholders are set to vote on whether to approve or reject the deleveraging plan later this month.
Like what you’ve read? To receive New Civil Engineer’s daily and weekly newsletters click here.