Interserve has failed to persuade shareholders to approve a rescue plan for the company. Interserve is expected to go into administration later today, although its contracts are likely to continue as normal and no job cuts are expected.
But its failure is likely to prompt further debate over the use of private sector contracts for public services. Interserve has 45,000 UK staff, and 65,000 globally, cleaning schools, and running catering and building projects. Shareholders voted 59.38% against the plan, which would have seen their stake reduced to just 5%, with lenders being handed the lion’s share of the business.
Interserve said: “The board of directors of the company is convening an urgent board meeting to consider its options.” However, the company added that “in the absence of any viable alternative it is likely to formally apply to go into administration.”
Accountants EY have been lined up as administrators. EY is expected to carry out a so-called pre-pack administration, an insolvency procedure under which a company arranges to sell its assets to a buyer before administrators are appointed. This means Interserve can avoid a Carillion-style collapse. Interserve’s lenders including banks RBS and HSBC, and investors Emerald Asset Management and Davidson Kempner Capital, are expected to take control once the process is complete.