LONDON (Alliance News) - Interserve PLC said Friday its is to commence an alternative deleveraging plan with shareholders not expected to receive "any value" for their shares.
The troubled support services firm said earlier in the day that it was preparing to enter administration and its shares were suspended following investors rejecting a proposed share placing as part of its "urgent" deleveraging plan.
The company has now said that the Interserve parent company will seek administration but its subsidiaries are to remain solvent, "providing continuity of service for its customers and suppliers".
Immediately following the administration order, Interserve's business and assets - essentially the entire group - will be sold to a newly incorporated company and this will be controlled by Interserve's existing lenders.
Once the sale to the new company is made, an alternative deleveraging plan will be implemented that will "achieve substantially the same commercial principles as the deleveraging plan".
This will include releasing the around GBP815 million in principal amount of secured debt owed to the Interserve's lenders, and the around GBP202 million of contingent secured liabilities owed to the company's bonding providers.
The alternate deleveraging plan will also involve exchanging GBP485 million of existing loans for ordinary shares and the provision of another GBP110 million of extra liquidity to the company. The purchaser will also assume approximately GBP3.4 million of Interserve's intragroup liabilities.
However, under the new alternative deleveraging plan, Interserve's shareholders "are not expected to receive any value for their shareholding."
This alternative deleveraging will take place once the group is sold.
Interserve said: "The board believes this is the best remaining option to preserve value, protect the jobs of employees and ensure the group can carry on as normal with minimal disruption."
In late February, Interserve proposed a GBP435.2 million fully underwritten share placing and open offer. The proceeds were to be raised as part of a deleveraging plan which the firm described as "urgently" needed to provide sufficient liquidity to service its short-term obligations.
On Friday, however, 59% of its shareholders voted against the plan to issue shares. Only 41% approved.
Following the defeat of share placing, Interserve confirmed its shares had been suspended from trading on the London Stock Exchange.
In response, Interserve announced it would hold an "urgent" board meeting to "consider its options."
"In the absence of any viable alternative, it expects to implement an alternative deleveraging transaction, which is likely to involve the company making an application for administration and, if the order is granted, the immediate sale of the company's business and assets (i.e. the entire group) to a newly-incorporated company, to be owned by the existing lenders," Interserve added in a statement.
Interserve expects this new plan to be implemented "very quickly" with the administration and sale expected to complete by "this evening."
"It will provide the group with a strong financial position, allowing it to grow and develop the business, to deliver on its long-term strategy and protect the group's employees," Interserve continued.
Interserve added: "This transaction would achieve substantially the same balance sheet and liquidity outcomes for the group as the deleveraging plan."
Shares in Interserve - prior to being suspended - had been trading 34% lower at 6.30 pence each. A year ago, shares were trading 69.10p and hit a 80.45p high in April 2018.
