Interserve investor attacks ‘obscene’ rescue deal and offers up alternative

INTERSERVE is evaluating a proposed alternative rescue deal from its biggest shareholder, which the hedge fund claims would result in a “materially superior outcome” for the beleaguered outsourcing firm.

Coltrane Asset Management, which owns a 27pc stake, is proposing to underwrite a £75m rights issue that would leave existing shareholders with a 10pc stake and lenders with under two thirds of the group.

This contrasts with the plan proposed earlier this month by Interserve that would almost wipe out existing investors, leaving them with a stake of just 2.5pc.

The company said it had received an “outline proposal” and was considering it. Interserve also plans to publish documents next week detailing its own plan and the timing of a general meeting at which shareholders would vote on it.

“The board confirms that it remains committed to achieving a consensual deleveraging plan,” it said.

Coltrane’s proposal would result in a lower debt burden for the company by putting an additional £75m of cash on the balance sheet, it said.

A source close to Coltrane told The Daily Telegraph: “It is proposing to double the money of its hedge fund creditors whilst wiping out shareholders. This proposal stops that obscenity.”

Earlier, Sky News reported that Interserve’s lenders would improve the terms of the deal in a bid to win over shareholders, leaving them with a 5pc stake.

Shares in Interserve soared more than 50pc to 15.6p, but even that rise left it with a market value of only £23m. Shares had been worth more than 400p just under three years ago.

Coltrane has called for eight Interserve directors to be removed but has lent its support to chief executive Debbie White.

Farringdon Capital Management, another hedge fund with a 6pc stake, said earlier this month it would also fight Interserve’s plan.

EY has been lined up as administrators if an agreement can’t be found, The Guardian reported.

Interserve builds roads, maintains military bases, cleans schools and employs 45,000 people in the UK.