Interserve directors face being pushed out as rescue deal finally surfaces

Interserve shareholders have launched a controversial bid to oust eight senior directors after the firm announced the details of a rescue deal designed to avoid it facing the same fate as Carillion.

After nearly two months of waiting, the struggling outsourcer this morning published details of the deleveraging plan designed to relieve the majority of its £650m debt pile.

Read more: Sigh of relief: Interserve finally offloads loss-making energy project

The firm’s lenders, which include RBS, HSBC and BNP Paribas, have agreed to help reduce its debts to around £275m by stumping up £75m and accepting £480m in new equity issued by Interserve.

Existing shareholders’ stake in the company has been all but wiped out by the deal, left with just 2.75 per cent of the firm. They will have the option to claw that £480m back through a preemptive open offer.

But Coltrane Master Fund, a hedge fund possessing more than five per cent of the company’s stocks, has written to the firm requisitioning a general meeting, and requesting directors Glyn Barker, Mark Whiteling, Russell King, Anne Fahy, Nick Salmon, Gareth Edwards, Dougie Sutherland and Nicholas Pollard be removed from the firm.

The company's share value climbed around 11 per cent in early morning trading as investors were at last able breath a sigh of relief that the firm has been saved. But Coltrane is not so happy, requesting David Frauman and Stuart Ross be installed as directors.

Debbie White, chief executive of Interserve and the architect of the rescue deal, continues to have Coltrane's backing, according to the firm.

Suppliers, and the company's 75,000 global employees, have been on tenterhooks for the last seven weeks since White said the firm would be pursuing such a deal in December, an announcement that raised serious concerns further down the supply chain that subcontractors would not be paid by the firm.

Contrary to previous reports, Interserve’s most profitable division, RMD Kwikform, a construction supplier, will remain part of the company. Morning Wire understands the Cabinet Office, which has played a significant role in the negotiations, strongly recommended Interserve did not sell the unit, for fear it would leave the rest of the company virtually worthless.

The department firmly denied reports it had blocked the sale entirely however, saying government advisors were only there to make recommendations. Whitehall is said to be supportive of the deal as whole.

A Cabinet Office spokesperson 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.” A government source added senior civil servants had not met with Interserve's lenders, and had no plans to do so in future.

Morning Wire understands that despite the months of turbulence and prospect of more instability at the firm generated by Coltrane's request, the Cabinet Office will continue to consider Interserve for major public contracts in the future.

White said: “Agreeing the key commercial terms of the deleveraging plan with our lenders, bonding providers and pension trustee is a significant step forward in our plans to strengthen the balance sheet.

“The board believes that this agreement will secure a strong future for Interserve. This proposal has been achieved following a long period of intensive negotiation and has the support of our financial stakeholders and government.

“Its successful implementation is critical to the Interserve Group's future and all of its stakeholders.

Read more: Interserve investors hold their breath for rescue deal

“The deleveraging plan will, alongside our 'Fit for Growth' transformation programme, place us in a strong position to deliver our strategy, be competitive in the marketplace and provide a secure future for the Interserve Group's employees, customers and suppliers.”

Workers at the NHS and the Foreign Office are among Interserve’s 45,000 UK employees, and 70 per cent of its annual £3.2bn turnover comes from the government. Among its contracts, it carries out maintenance on 1,100 offices and depots for the Department of Transport.