Interserve rescue plan rejected as company files for administration

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Interserve has announced the appointment of Ernst & Young LLP as administrators as it sells the company to a new firm controlled by its lenders

In a statement issued on 15 March, Interserve has appointed Alan Hudson and Hunter Kelly of Ernst & Young LLP as administrators.

All companies in the group other than the parent company will stay solvent, providing continuity of service for customers and suppliers.

The sale of the group completed on 15 March immediately followed the appointment of the administrators, in what it hopes would minimise any disruption to the business, “providing continuity for customers and suppliers, and protecting the group’s employees”.

On 15 March, shareholders voted 59.38% against a rescue plan to address Interserve’s growing debt.

The plan would have seen their stake reduced to just 5%, with lenders being handed the managing share of the business.

However, after the vote, Interserve said that “in the absence of any viable alternative” rescue plan it would formally apply to the High Court to go into administration.

EY was appointed under a “pre-pack administration”, an insolvency procedure in which a company arranges to move its assets to another owner before administrators are officially appointed.

Following the sale, the company revealed that the aim is for an alternative transaction to be implemented involving the equitisation of approximately £485m of existing debt and the injection of £110m of new money into the group.

Debbie White, Chief Executive Officer, Interserve Group said: “With a stronger financial platform in place, Interserve will be able to concentrate on delivering value for our customers.

“The group’s transformation programme will continue, focused on improving our value propositions for customers, standardising our operational delivery, making Interserve simpler and more efficient through our Fit for Growth initiatives, and embedding a culture of ownership and openness throughout the group.

“Interserve is fundamentally a strong business and with a competitive financial platform in place we see significant opportunities ahead as a best-in-class partner to the public and private sector.”

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