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Interserve to go into administration after rescue deal rejected

The Guardian logo The Guardian 15/03/2019 Rob Davies
© Getty

Government contractor Interserve is to go into administration after its largest shareholder, the US hedge fund Coltrane, led a rebellion against financial restructuring plans drawn up by the company’s lenders.

The result of the vote, held at an emergency meeting of shareholders, fires the starting gun on a “pre-pack” administration of the company likely to be completed by the end of the day. Interserve has thousands of government contracts such as hospital cleaning, school meals and maintenance of military bases in the Falklands. It also operates the probation service.

While shareholders will be wiped out, with ownership falling to the lenders, the nature of a pre-pack administration means the company, which employs 45,000 people in the UK, can continue trading.

© Getty

The company said this should ensure no disruption to the key public services that Interserve manages for the government.

Coltrane, which owns 27% of the company, has repeatedly rejected the lenders’ restructuring proposals.

Banks and hedge funds that hold Interserve’s £631m debt will agree to cancel £485m of it, in return for ownership of the company’s stock, leaving shareholders with only 5% between them.

The chairman, Glyn Barker, told shareholders that the debt was “crippling” the company, which could not continue as a going concern if the refinancing did not go through.

Asked how Coltrane had voted before the results were known, a man at the meeting who was understood to be a representative of the US hedge fund said: “I voted for Donald Trump.”

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Coltrane had put forward its own rival restructuring plan, which Barker told the meeting was not capable of being implemented.

Chris Baldock, 66, a retired small shareholder, told the Guardian he was “disgruntled” at how the company had been run.

“I was buying shares at £3 and they’ve gone down to 15p. I’ve lost about £12,000,” he said, adding that the company’s management had been “overconfident”.

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