Coltrane calls for Interserve rights issue as it fights White's plan

Interserve’s largest shareholder has unveiled a new proposal to rescue the contractor as it continues to fight Debbie White’s deleveraging plan.

Coltrane Asset Management, which owns a 27% stake in the contractor, wants creditors to take just 55% of equity in Interserve in exchange for writing down £435m of its debt.

Under the plan shareholders would hold on to a 7.5% stake in the firm, with a further 37.5% equity in Interserve created through a £110m rights issue – which Coltrane has offered to fully underwrite.

The proposal comes as shareholders prepare for a crunch vote in 10 days on whether to accept the agreement Interserve’s management, led by Debbie White, agreed with its lenders.

White needs 50% of shareholders to consent to the package, which would see creditors take a 95% stake of the firm in exchange for a £435m debt write-down.

Shareholders would see their stake diluted into a collective 5% equity in Interserve.

Source close to Coltrane say the offer of an underwritten rights issue provides Interserve’s management with a way to raise cash and stave-off a liquidity crisis, removing the threat from creditors to plunge the contractor into administration.

In a bid to pressure shareholders to vote for White’s deal, Interserve’s lenders are understood to have lined up EY for a potential administration of the contractor – an outcome which would completely wipe out existing shareholders.

On 26 March shareholders will vote on Coltrane’s proposed rescue settlement, as well as another motion by the New York-based hedge fund calling on Interserve’s entire board, minus White, to stand down. 

In statement responding to Coltrane’s latest proposal, Interserve said: ”A further announcement will be made in due course. In the meantime, the board remains committed to achieving a consensual deleveraging plan.”