Outsourcing giant Interserve has failed to persuade shareholders to approve a rescue plan for the company.
Interserve will continue to operate its contracts, but is expected go into administration later today.
Its collapse is likely to prompt further debate over the use of private sector contracts for public services.
The firm employs 65,000 staff worldwide, 45,000 in the UK, cleaning schools and hospitals, running probation services and in construction.
Shareholders voted 59.38% against the plan, which would have seen their stake reduced to just 5%, with lenders being handed the lion’s share of the business.
Interserve said: “The board of directors of the company is convening an urgent board meeting to consider its options.
“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 (i.e. the entire group) to a newly-incorporated company, to be owned by the existing lenders.”
The company said that its shares would be suspended on the London stock market immediately.
Accountants EY have been lined up as administrators. They will then sell the company for a nominal amount to the current lenders (a mixture of banks and bond holders) who will own 100% of the new company.
Before the vote the board indicated it did not expect any interruption to the company’s underlying contracts or any immediate job losses, in the event of administrators taking over.
Interserve accumulated debt after construction project delays and a failed energy-from-waste project in Derby and Glasgow.
What is Interserve?
The outsourcing firm is one of the UK’s largest public services providers. The firm started in dredging and construction, and from there has diversified into a wide range of services, such as healthcare and catering, for clients in government and industry.
It sells services, including probation, cleaning and healthcare, and is involved in construction projects.