Interserve announced the date of a crucial 15 March meeting last week. It hopes to gain the support of at least 50% of shareholders to raise £435.2m through the placing of new shares which will provisionally be placed with the company’s lenders, arguing it “in the best interest of all our stakeholders”. The deal will leave shareholders with 5% of the equity in the business, rather than the 2.5% originally reported ahead of publication of details of the plan.
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Coltrane Asset Management, which along with hedge fund Farringdon owns 34% of the business, had already made it clear that it was opposed to that plan. Now it has proposed a new proposal of its own.
It wants to see the issue of at least £110m of new shares in the company, to be offered to shareholders pro rate and underwritten by Coltrane. The new issue and the conversion of £435m of debt in the company into equity would leave existing creditors owning 55% of the business, and shareholders with 37.5%.
In a statement, Coltrane said: “Given that a better proposal for a greater number of stakeholders is now on the table the directors, in their capacity as fiduciaries to the company, should halt cooperation with lenders on implementation of their plan. If the company is not able to make such a decision then this raises serious questions about the board’s decisions leading to this point, and about the position of the lenders, including major UK banks. Throughout this process, the board has prioritised discussions with lenders rather than shareholders, limiting the company’s options and reducing the scope for a solution that addresses the interests of all stakeholders.”
It added: “The updated Coltrane proposal is intended to be delivered on a consensual basis, and is the only plan that can be. It is better for the company and its key stakeholders, and has been developed by Coltrane and its advisors without any funding from the company – despite the company anticipating expenditure of c. £90m on its and its creditors’ advisors to implement its proposal, which would leave the company in a poorer financial condition.”
Responding to Coltrane’s proposal, Interserve said in a statement: “The board has this afternoon received an updated proposal from Coltrane Asset Management, which it is considering.
“A further announcement will be made in due course. In the meantime, the board remains committed to achieving a consensual deleveraging plan.”
