Struggling outsourcer Interserve faces crucial vote on rescue deal

Struggling outsourcer Interserve faces crucial vote on rescue deal

Attempting to provide some reassurance, Interserve say they expect the administration and sale to be completed this evening so that it ensures the "business will continue to operate as normal for customers and suppliers".

A pre-pack administration lets a company sell itself, or its assets, as a going concern, without affecting the operation of the business.

"Following Carillion's collapse, it was generally assumed that there would be a radical reappraisal of the public sector's approach to construction/infrastructure procurement", Klein added.

A spokesperson for the company said: "The board of directors of the company is convening an urgent board meeting to consider its options". The gov't model of outsourcing services to cut costs has failed.

The GMB union, which also represents Interserve workers, called for an end to the "disastrous experiment" of outsourcing.

John Tizard told PF that public sector clients will need to "spring into action either to bring the services back into public management or to broker the contracts to other contractors".

However, the GMB union said earlier on Friday that Interserve's problems, which come after the failure of Carillion previous year, showed it was "time to turn the tide on the disastrous experiment" of outsourcing public services.

Tony Williams, a construction analyst at Building Value, commented there was "nothing wrong" with outsourcing, but the likes of Carillion and Interserve had squandered too much cash on "misguided and expensive acquisitions".

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Around 60% of the votes cast rejected the proposed debt for equity swap, which would have given lenders 95% of the business and left shareholders with just 5%.

The deal involves the equitisation of around £485 million of existing debts.

Completion of this alternative deleveraging transaction is expected to take place shortly after the completion of the sale of the Group.

Shares were suspended on the London Stock Exchange on Friday.

The New York-based hedge fund has been pushing for an alternative deal whereby a smaller proportion of the firm goes to lenders, and shareholders retain a larger holding.

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.

At the close of trading on Thursday, two hedge fund firms - Brightsphere Inc and Millennium International - had short positions in Interserve greater than 0.5 percent, Financial Conduct Authority data showed.

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