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Critical week begins for Interserve

11 March 2019

After failing to gain the agreement of its main shareholder for its Deleveraging Plan, Interserve is facing further issues in its long-running attempts to return to profitable trading.

Its previously-announced plan aims to reduce its debts by more than half to £275m from £600m through the issuing of new shares.

This would result in shareholders owning 95% of the business, although they would have "heavily watered-down shareholderings", according to the BBC.

The company's largest shareholder, Coltrane Asset Management, proposed an alternative plan that resulted in Interserve issuing a statement last week.

It said the Coltrane proposal required consent from "lenders, bond providers and Pension Trustee to be capable of implementation".

Interserve also said it was "unknown" whether it was possible to obtain lender support for "a materially different deal requiring lenders to take significantly larger write offs" in the timeframe available.

It further stated that Coltrane's proposal was non-binding, unfunded and subject to due diligence, with no certainty of its successful implementation.

The company's board said it was therefore urging shareholders to vote in favour of its Deleveraging Plan on 15 March.

Although Interserve could enter administration if it fails to gain the support of its lenders, the BBC has reported that the company "does not expect any interruption" to its contracts or any redundancies in the short term.

There have been numerous reports on Interserve's finances, particularly following the failure of Carillion in January 2018 and its first refinancing of debt in March last year.

Concern has also been expressed over the placing of bets on the company's failure by financial service businesses, raising discussion on the impact this has on the future of the company involved.

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