Interserve shareholders reject rescue package
Interserve, one of the British government's biggest contractors, is set to go into administration on Friday after shareholders rejected a rescue plan.
The provider of public services ranging from school lunches to hospital cleaning, which employs 65,000 people including 45,000 in Britain, said it will file for a 'pre-pack' administration on Friday under a plan overseen by EY.
A pre-pack process enables the sale of assets to a new owner and Interserve said in a statement that its lenders were lining up to buy them and enable it to operate "as normal" for the time being.
"This announcement will not affect jobs of the provision of public services delivered by Interserve," a spokesman for the Cabinet Office, which oversees government contracts, said, adding it was in close contract with the company.
The turmoil at the debt-laden firm raises fresh questions about the resilience of Britain's outsourcing sector, just over a year after its rival Carillion collapsed into liquidation.
Debt-laden Interserve ran into difficulty after a string of ill-advised acquisitions and loss-making contracts.
The GMB union, which represents Interserve workers, called for an end to the "disastrous experiment" of outsourcing.
"Shambolic mismanagement is putting jobs on the line and services in jeopardy. Our public services can't go on like this," the GMB said in a statement.
Tony Williams, a construction analyst at Building Value, commented there was “nothing wrong” with outsourcing, but the likes of Carillion and Interserve had squandered too much cash on “misguided and expensive acquisitions”.
“Trying to be all things to all people is an impossible and dangerous strategy,” he added.Published: by Radio NewsHub