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https://www.google.co.uk/amp/s/uk.mobile.reuters.com/article/amp/idUKKBN1QS2A4
They are talking to Coltrane to ascertain what it would take for them to support the deal. I suspect they will want a RI which will not be feasible in the time given.
Meta,
I agree some official communication would be welcomed - either way.
They need to respond quickly to the Sky report (7.5% deal) to either hopefully confirm it or destroy hopes again.
Either way if there is no comment, I can't see how existing shareholders should vote......do now vote down the 5% deal in lieu of the 7.5% deal?
Just need a formal RNS or any response from Interserve.
"The Board are are conducting all their comms through interviews and quotes with the newspapers. Not an RNS in sight. I'm amazed"
"Interserve declined to comment" - seems to be the standard line doesn't it.
And this from an LSE listed company with regulatory responsibilities.......
Whatever, they are going to have to get a wriggle on, considering 11.00am 13th March is the latest time and date for receipt of Proxy Votes.
The 7.5% deal that is being considered by the Lenders and the BoD is not the Coltrane deal.
It is just the Lenders offering more as they probably can afford to versus the costs / risks associated with Pre-Pack Administration.
Coltrane should now understand its the absolute best they are going to get, and will vote it through.
Thanks for that link Metamorphosis84.
These cuttings from it, reinforces exactly the point I was making in my previous posts.
"Trouble is, Coltrane is living in dreamland.
Its whole stance through this process seems to be based on the false premise that shareholders have any real financial control over this business. They don’t. The banks are in charge. And so they should be: they are the senior creditors to Interserve and, in this deal, are forgiving £485 million of debt and injecting £110 million of new money."
"But the Coltrane camp holds no negotiating cards. Interserve will collapse into administration if the current plan is not voted through this week, resulting in shareholders getting not 5%, not 37.5%, but zero %. That means no possible chance of benefiting from any future improvement in Interserve’s prospects."
The thing about playing chicken is that usually however good you are at bluffing you cave at the end.
And so, Bondholders offer 2.5%, bondholders cave, bondholders offer 5%, bondholders thinking about caving, bondholders thinking about offering 7.5%.
Tells you something about who's bluffing most.
IRV runs out of money by Friday, technically insolvent. There are different bondholders involved with different objectives.
I suspect it's going to get more messy. The Board are are conducting all their comms through interviews and quotes with the newspapers. Not an RNS in sight. I'm amazed.
Backs up my thoughts about Coltranes barking mad plan "Its whole stance through this process seems to be based on the false premise that shareholders have any real financial control over this business. They don’t." "Sources tell me its presentation on an alternative finance package consisted of five brief slides for an overhead projector, including the front page header. " "Seems to me it is just playing a game of chicken in the hope that the banks will hand over a couple more percentage points of the equity to make it shut up." "But they’re wrong. The deal on the table has been long fought out between the banks, the board, the pensions trustee and the government" https://www.standard.co.uk/business/jim-armitage-us-hedge-fund-is-in-cloud-cuckoo-land-on-interserve-deal-a4088266.html
Llucan, who says they are negotiating? There has been no RNS issued.
The truth of the matter is that when a company is heavily in debt, the lenders interests over ride that of the shareholders. So I doubt that the BoD have done anything illegal. Immoral perhaps, but not illegal.
Look at it his way, let's assume you bought a house for £250k with a £200k mortgage, and then in a rising market, borrowed another £100k to build an extension and buy a new car. Then the property market collapses, and your house is now worth just £200k, but your debt is £300k. So who really owns the house, you or the lender?
Meta,
7.5% makes a massive difference to "de-listing" as it puts the share price well above the offer price and therefore makes the offer price attractive. Thus leaving a far higher possibility of 25% free float after the deal.
If this deal gets through - its the best outcome for everyone imo
GL
kenj
If what you are saying is true why are they even bothering negotiating?
The pre-pack has to be agreed by a court appointed insiolvency practitioner.
The BOD could face litigation and more if they fail to act in the best interests of shareholders.
Not only that but it would be a "hot coal" for a liquidator to go with a pre-pack when there is a viable offer on the table. The BOD might not think it is viable but a court may
I do not think it is a done deal at all yet or they would not have increased the offer.
It is a better deal. But. In order for this to be a credible offer, the risk of de-listing needs to be removed. Remember: "It is likely that one or more of the Lenders may requision a Shareholders meeting to vote on whether to cancel the Company's listed.....if more than 75% of Shareholders votes in favour......would be de-listed." 2.5%, 5%, 7.5% or even 10% makes little difference in respect of the above.
RNS hopefully on its way, explaining the revised 7.5% deal
GLA
cant see any rns on this 7.5 % ditch all the board bin them.
"Would this provide Interserve more time and put Coltrane in a position where they could force their deal through after voting out the BoD on the 26th March?" Feileb
"Pre-pack they could probably live with but it may be difficult to force it through if Coltrane is being difficult." Llucan
Feileb, you and Llucan have failed to understand how a pre-pack administration works. The clue is in the title "Pre-pack". The deal has been packaged and agreed well before the vote is taken. As soon as the vote is lost an administrator is appointed, who sells the business to a new company formed by the lenders and the BoD. It will happen within hours of the vote being lost, if that is what the board elect to do.
This is not like a normal administration where the administrator looks for buyers for solvent parts of the business, and sells off any plant, machinery, buildings etc that are left. The buyer has already been selected in a pre-pack. The new business will be up and running on Monday morning.
Coltrane may have got improvements on the original deal, but imo, they have been out fought and out-thought. To buy all their shares and retain a 27% holding would cost them £115m. To vote down the deal offered could wipe out all existing share value. So what will they do? My guess is that they will sell down some of their holding and only take some of their allocated shares, retaining perhaps around a 7% holding.
LLucan,
Agree, I think they would have lost on Friday and Pre-pack Administration was not as easy as it sounded.
7.5% is a fair outcome and will get voted through
I think the board are worried that Coltrane may derail their pre-pack plans.
https://uk.finance.yahoo.com/news/interserve-attacks-hedge-fund-coltrane-122700881.html
At last a deal everyone can vote for
Common sense prevailing at 7.5%
If this gets the go ahead then we are looking at 20p to 25p following the deal
With a chance over along time to get back to 50p
This would be a fair result for all parties involved
Yes CC there if it was a case of 'business as usual' for pre-pack, then I don't think the BOD would have spent the weekend begging shareholders to vote it through via various media outlets.
Furthermore I suspect HMG do not want this to go to administration, pre pack or otherwise, thats if HMG is still functioning by the end of the week.
Remember the fuss about the Honda factory shutting.... the ferry company with no ferries..
Which former justice sec was responsible for signing off the probation services PFI. Can HMG afford ministerial resignations?
I am not suprised that an increased offer may be coming because administration has far reaching consequences.
The BOD have to consider that if Coltrane are not happy with the deal they may bring legal claims against the board for not working in the best interests of the shareholders. Are the BOD in cohoots with lenders.
I also think the government is working in that background. They do not want Interserve to go bust. Pre-pack they could probably live with but it may be difficult to force it through if Coltrane is being difficult.
Presumably means they have had feedback vote will go against them and pre-pack isn't as attractive as they make out (probably means IRV banned from certain supplier lists?)
Cc its an interesting take on the supplier situation. Are the BOD just telling suppliers what they want to here re. business as usual.
And what the hell does 'business as usual' mean anyway?
Not getting paid by Interserve? Because that is reality of 'business as usual' for a lot of suppliers.
hxxps://news.sky.com/story/interserve-lenders-in-talks-about-last-ditch-deal-sweetener-11662097
But yet again the bondholders are trying to be too greedy. If they ran with 10% I'm sure it would get through for sure. Will 7.5% be enough. Who knows
Additional view.
if the bondholders came up with £150m, I think this would stabilise the supply chain, suppliers would be willing to work for them and it would not actually be needed. Further, I suspect the actual level of bank borrowing would be less under this scenario than the £75m scenario after a couple of months once suppliers have proof they are getting paid on time.
The £75m is cutting it too fine.
My views about Clients and Suppliers.
It takes me about 2 minutes to work out the following. the supply chain will do the same.
The Chairman has stated IRV will run out of money by the end of the week. On Friday regardless of vote IRV gets an additional £75m cash.
IRV turns over £2.7m or £225m a month, so between 18th and 31st March it will get £112m of incoming cash (assuming flat profile- I suspect it's lower than this as cash tends to come in during the first 7 days of the month but let's put that aside).
The wage bill at the end of the month will have to paid. Let's assume 50% of their costs are staff wages (someone could get a better number I'm sure), so that's £112m to be paid out by the end of the month.
So, assuming they don't pay any suppliers between Friday 15th and end of the month they end up with £75m+112m-112m = £75m. but if we assume they do pay suppliers and it's 50% of their costs, that will cost £225/2/2= £56m (again flat profile won't be correct as alot of payments will flow into the first few days of the month)
Which will leave £75m-£56m=£19m in the bank. Not very much. Doesn't inspire confidence. And that's the problem. If the bondholders want to stabilise the supply chain they have to come up with more than £75m, far more.
Of course, given enough time if IRV continues to make £93m EBITDA and the interest bill is cut on Friday, it's cash position will gradually improve, but very slowly and only if the working capital position remains constant, which requires the supply chain to be willing to do business with them
For every share seller there is a buyer. So who is buying the shares? Coltrane maybe or more likely the lenders to ensure the pre-pack gets voted through.