Interserve faces administration after shareholders shun rescue deal - Companies

Interserve to go into administration after rescue deal rejected

Interserve will fall into administration and be sold to its lenders tonight after shareholders voted to reject a rescue package put together by its management team.

It says since the collapse a year ago of another Government contractor, Carillion, it is been warning that similar corporate collapses were inevitable without government action.

Unite UK says it is demanding an urgent meeting with Ernst Young, Interserve's administrators, and expects to be fully consulted on any potential transfers to new companies.

"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".

Ahead of Friday's vote, Sky News reported that Coltrane had written to EY to urge them against a pre-pack insolvency deal.

The move would effectively wipe out Interserve's shareholders, who were voting on a proposed debt for equity swap that would have left lenders with 95% of the business and the shareholders' stake diluted down to 5%.

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Interserve's shareholders voted 59 percent against a debt-for-equity rescue package at a general meeting in central London on Friday, in a victory for its biggest shareholder, USA hedge fund Coltrane, which owns a 28 percent stake and had opposed the plan.

Interserve has been hampered by high debts, construction delays and a failed foray into the energy-from-waste market.

"Ministers have learned absolutely nothing from the Carillion fiasco and are hell-bent on outsourcing public sector contracts".

Interserve is one of the government's largest contractors.

Barker had warned against rejecting the rescue plan and forcing the firm into administration, arguing it would be "more disruptive to the company, significantly more costly and would deprive shareholders of any value whatsoever". It said: 'By being forced into administration the entire workforce is facing an uncertain future.

A Cabinet Office spokesman said: 'This announcement will not affect jobs or the provision of public services delivered by Interserve. It adds it is in close contact with the company and is "confident a positive way forward will be found".

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