Hedge funds push Interserve into administration leaving 16,500 small shareholders with nothing
- The rebellion was led by US hedge fund Coltrane and Dutch fund Farringdon
- Interserve’s collapse left 16,500 small shareholders with nothing
- The rescue was rejected by 59 per cent to 41 per cent
Two foreign hedge funds pushed Interserve into administration – and left 16,500 small shareholders with nothing.
In a humiliating blow to the Government contractor’s chief executive Debbie White and chairman Glyn Barker, investors rejected a rescue package that would have slashed their stake in the company to just 5 per cent and handed the other 95 per cent to Interserve’s lenders.
The rebellion was led by New York-based hedge fund Coltrane Asset Management, the largest investor with a 27 per cent stake, and Dutch fund Farringdon, which held about 6 per cent.
Interserve’s rescue was rejected by 59 per cent to 41 per cent
The Mail understands that if ballots from the two hedge funds were removed, 95 per cent of the vote was cast in favour of the company’s plan, known as a debt-for-equity swap.
But investors holding 44 per cent of Interserve’s shares did not vote at all – meaning the rescue was rejected by 59 per cent to 41 per cent. It means shares held by an army of 16,500 small investors are wiped out.
Last night Interserve said it had completed a ‘pre-pack’ administration within hours of the vote that handed control to its lenders, including Barclays and Royal Bank of Scotland, and hedge funds such as Cerberus. It insists that operations will continue as normal on Monday morning.
Mark Bentley, a director at retail investor group Sharesoc and a small shareholder in Interserve, said: ‘What the hell did the major shareholders think they were doing by not supporting the resolution?
‘It’s a case of turkeys voting for Christmas – those shareholders who haven’t voted, or voted down, have now lost everything.’
The deal – a second bailout in a year – would have cut Interserve’s crippling £631million debt pile and kept it publicly listed.
Interserve’s market value has plunged from more than £1billion in 2014 to less than £20million
But it was opposed by Coltrane. The US group put forward its own proposal, which would have left shareholders with a bigger stake and axed the company’s entire board except for White.
Interserve – which employs 68,000 people worldwide, around 45,000 of which are in the UK – questioned the viability of Coltrane’s plan.
The contractor provides services such as operating army bases abroad, building roads and bridges and cleaning schools.
It began running into financial difficulties in 2016, when a rapid expansion and a disastrous move into the energy-from-waste sector began to send its debt spiralling.
It agreed a bailout with lenders in early 2018 in a bid to cut debt, but in December it announced it was in discussions for a second rescue package.
Interserve’s market value has plunged from more than £1billion in 2014, when its share price was close to 500p per share, to less than £20million by the time its stock was delisted, when it was worth just 6.3p per share.