Interserve confirm that its business as usual
Interserve confirmed that its business as usual for its 45,000 UK employees, customers, suppliers, and other stakeholders, insisting that this deal would protect services and jobs.
The business and assets of Interserve plc have been sold out of administration to a newly incorporated company to be controlled by the group’s lenders.
This move is the result of weeks of speculation regarding its future and its ability to meet creditors demands, with shareholders rejecting a rescue deal for the company, and its UK staff. Under a pre-arranged agreement, administrators EY were installed and the assets moved immediately to a group controlled by Interserve’s lenders.
The alternative transaction involves the equitisation of approximately £485 million of existing debt and the injection of £110 million of new money into the Group.
The company cleans schools and hospitals, runs catering and probation services, and manages construction projects.
On Friday 15th March , shareholders voted 59.38% against a rescue plan to address Interserve’s mounting debt pile.
The plan would have seen their stake reduced to just 5%, with lenders being handed the lion’s share of the business.
But after the vote, Interserve said that “in the absence of any viable alternative” rescue plan it would formally apply to the High Court to go into administration.
EY was appointed under a so-called pre-pack administration, an insolvency procedure in which a company arranges to move its assets to another owner before administrators are officially appointed. This means that Interserve should be able to avoid a Carillion-style collapse. However, investors have seen the value of their shares wiped out under the financial restructuring.
The lenders who are now in control of Interserve Group include banks RBS and HSBC, and investors Emerald Asset Management and Davidson Kempner Capital.
In a statement, EY administrator Hunter Kelly said: “This transaction secured the jobs of 68,000 employees, the majority of whom work in the UK, as well as ensuring there was no disruption to the vital public services that Interserve provides to the UK Government.”
Debbie White, chief executive of Interserve Group, said: “Interserve is fundamentally a strong business and with a competitive financial platform in place we see significant opportunities ahead as a best-in-class partner to the public and private sector.”
A spokesman for the Cabinet Office said: “We welcome this announcement. It brings the company the stability required for it to compete for future business and continue to deliver good value public services for the taxpayer.”
Interserve accumulated debt after construction project delays and a failed energy-from-waste project in Derby and Glasgow.
Interserve insisted that the deal would protect services and jobs.
All companies in the Group other than the parent company will remain solvent, providing continuity of service for customers and suppliers.
Completion of the transaction is anticipated to occur on or before Monday 18 March.
The Group believes this is the best remaining option to preserve value, protect the jobs of employees and ensure the Group can carry on as normal with minimal disruption.