LENDERS TAKE CONTROL OF INTERSERVE
£480m rescue by RBS, HSBC and pub tycoon Current shareholders to lose almost everything Furious investor in bid to shake up board
HIGH Street banks and a Scottish pub tycoon are among creditors set to take control of contractor Interserve in a deal to save it from collapse.
HSBC, Royal Bank of Scotland and others who are owed money are to get £480m of new shares in the ailing company, which has 75,000 staff.
Alan McIntosh, the co- founder of Punch Taverns, whose investment firm has been buying Interserve’s debt on the cheap for a year, will also number among their ranks.
The deal will stop the business going under. But existing shareholders will be nearly wiped out, losing almost everything. One furious shareholder has tabled an emergency vote to remove nearly all the firm’s board members.
The rescue is the culmination of years of turmoil at Interserve after an ill-judged acquisition spree left it with a debt pile of £600m and a stock market value of just £19.4m.
Shares are down around 98pc in the past five years.
Interserve is one of the Government’s biggest contractors, carrying out work such as catering and cleaning as well as major construction projects including a £25m hospital project in Merthyr Tydfil, Wales.
A Cabinet Office spokesman said: ‘We welcome the announcement that Interserve has made this morning and recognise it is a key milestone for the company in delivering the long-term recovery plan that it set out in 2018.’
If the rescue plan goes ahead, Interserve’s net debt will be cut to £275m. The new stock issued will account for 97.5pc of the company’s value, leaving current shareholders with just 2.5pc and landing them with massive losses.
It will be given to creditors including HSBC, RBS, French bank BNP Paribas and US investment firm Davidson Kempner Capital Management. Other holders of debt include Emerald Investment, which looks after the £175m fortune of Scottish entrepreneur McIntosh.
Emerald was last year rumoured to be Interserve’s biggest creditor after it bought up loans from banks such as Barclays and Lloyds for as little as 50p in the pound.
It could therefore be in line for the largest chunk of stock.
Current investors must approve the plan in a vote, with a date yet to be fixed. If they refuse to give permission, Interserve is considering other options to force the rescue deal through.
Joe Brent, an analyst at the investment bank Liberum, said: ‘We believe that this is an intelligent deal which seeks to secure the future of the business, while providing some return to the banks.’
The deal has been supported by the trustees of Interserve’s pension scheme.
It will avoid a sale of building supplier RMD Kwikform, which is considered Interserve’s best asset.
But the firm’s biggest shareholder, Coltrane Asset Management, is furious and has demanded a vote on plans to axe eight board members, who would be replaced with two of its own favoured candidates.
New York-based Coltrane, which owns around 15pc of Interserve’s stock, said it still has confidence in chief executive Debbie White.
The date for this vote has yet to be finalised.
Yesterday, Interserve shares closed down 1.8pc, or 0.24p, at 12.93p.