Construction and services giant Interserve is likely to file for administration later today after failing to persuade shareholders to approve a rescue plan for the company.
The £3.2bn group is now expected to be placed into administration later today as part of a pre-pack deal after shareholders rejected the plan that would have seen their overall stake reduced to just 5%.
Interserve, which employs 45,000 workers across the country on outsourcing and construction contracts, will start a pre-pack administration by the end of the day.
Interserve is the latest large construction and services company to suffer financial difficulties.
Last year, contractor Carillion plunged into liquidation after suffering heavy losses throughout the business, resulting in the loss of thousands of jobs.
Social housing contractors have also recently been hit with difficulties. Last November, contractor Forrest entered administration due to cashflow issues, with Engie taking over its £350m repairs deal with Anchor Housing Association.
The pre-pack deal will see administrators EY sell the business to a newly incorporated company owned by Interserve’s existing lenders for a small fee.
A market announcement by the Interserve board revealed just after noon that shareholders had voted 59.4% to 40.6% to reject the rescue plan put forward by the board.
It comes amid disagreements over the rescue plan between the Interserve board and its largest shareholder, Coltrane, which owns 28% of the company.
Following the market announcement, Interserve’s board carried out an urgent board meeting and released a statement that said “in the absence of any viable alternative” the only way forward was a transaction that would likely result in an application for administration.
The statement said: “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 (ie the entire group) to a newly incorporated company, to be owned by the existing lenders.
“This transaction would achieve substantially the same balance sheet and liquidity outcomes for the group as the deleveraging plan.”
It added: “The alternative transaction will be implemented very quickly and via a carefully managed process and the administration and sale is expected to be completed this evening, ensuring that the business will continue to operate as normal for customers and suppliers.
“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 (including the beneficiaries of the group’s pension schemes).”