Interserve to go in administration after rescue deal blocked

Interserve to go in administration after rescue deal blocked

Interserve to go in administration after rescue deal blocked

The provider of public services ranging from school lunches to hospital cleaning, which employs 65,000 people including 45,000 in Britain, said it will file for a "pre-pack" administration on Friday under a plan overseen by EY.

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, United States hedge fund Coltrane, which owns a 28 percent stake and had opposed the plan.

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%.

If shareholders fail to back the debt-for-equity deal, the firm could go into administration by the weekend.

"Ministers have learnt absolutely nothing from the Carillion fiasco and are hell-bent on outsourcing public-sector contracts", Kevin Brandstatter, GMB national officer, said.

It employs 45,000 people in the United Kingdom and relies on contracts to serve schools, hospital and the army for 70% of its revenue.

Interserve insisted that the deal would protect services and jobs.

Shares will be suspended from trading on the London Stock Exchange immediately.

"They are likely to go into administration because Coltrane has said they won't vote for the deal, but can we really afford to have key public services decided by USA hedge funds?" he queried.

Both the rescue deal and the pre-pack administration are created to keep those contracts going and jobs in place, at least in the short term.

The firm's collapse will likely be "costly and disruptive" for public services, he added. Its website also states that it provides probation services for 40,000 people on behalf of the Ministry of Justice.

And at King George Hospital in east London, for instance, Interserve has a £35m contract for cleaning, security, meals, waste management and maintenance.

Richard Beresford, chief executive of the NFB, said it was time to reform "the procurement process from its foundations to ensure that more regional contractors can compete and win work". "Our public services can't go on like this".

The firm is holding a crucial shareholder vote to decide whether to accept a rescue plan which would see its lenders write off hundreds of millions of pounds in debt in exchange for new shares.

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