LONDON (Reuters) - Interserve said on Tuesday it had rejected a rescue plan put forward by its largest shareholder Coltrane Asset Management because it believed the proposal risked the future of the outsourcer in its fight for survival.
Interserve, which employs 68,000 people, has been racing to avert a collapse like that of its peer Carillion.
The British group, which has struggled to service debt due to project delays and a weak construction market, struck a deal in February under which existing shareholders would retain 5 percent of Interserve in a debt-for-equity swap with lenders.
But Coltrane, which owns 28 percent of the group, has put forward an alternative proposal in which Interserve would issue at least 110 million pounds ($144 million) worth of new shares, underwritten by Coltrane.
The new issue plus the conversion of 435 million pounds of debt in the company into equity at par would leave existing creditors owning 55 percent of the company, with shareholders owning 37.5 percent, assuming a full take up.
Interserve said it could not accept the proposal “in light of the company’s short-term liquidity requirements and given that Interserve’s Deleveraging Plan is currently the only fully funded proposal which has the agreement of lenders, bonding providers and Pension Trustee.”
“The board is unable to consent to this request without risking the future of Interserve together with its employees, pensioners, customers and suppliers,” it said.
Interserve said it remained open to considering alternative proposals but that, as things stood, the board recommended shareholders support the Deleveraging Plan at a vote on 15 March.
($1 = 0.7634 pounds)
Reporting by Kate Holton; Editing by Alistair Smout