The deleveraging plan involves the issuing of £480 million worth of new shares and transferring £350m of existing debt to Interserve’s RMD Kwikform business, which will remain part of the consolidate group despite earlier reports that it may be sold off.

The firm’s net debt will be more than halved to £275m as a result.

Under the deal, existing shareholders will be all but wiped out with the new shares accounting for 97.5% of the enlarged Interserve stock.

Existing lenders, including RBS, HSBC and BNP Paribas, will provide an additional £75m of new liquidity through the provision of a new debt facility with a maturity of 2022.

Following the announcement, an existing shareholder has called for eight directors to be removed from the company’s board.

Debbie White, CEO of Interserve, said: “Agreeing the key commercial terms of the deleveraging plan with our lenders, bonding providers and Pension Trustee is a significant step forward in our plans to strengthen the balance sheet.

“The Board believes that this agreement will secure a strong future for Interserve. This proposal has been achieved following a long period of intensive negotiation and has the support of our financial stakeholders and Government. Its successful implementation is critical to the Interserve Group’s future and all of its stakeholders.

“The Deleveraging Plan will, alongside our ‘Fit for Growth’ transformation programme, place us in a strong position to deliver our strategy, be competitive in the marketplace and provide a secure future for the Interserve Group’s employees, customers and suppliers.”

Meanwhile New York hedge fund Coltrane, which holds over 5% in the group, has issued a Requisition Notice which proposes that chairman Glyn Barker, finance director Mark Whiteling, executive director Dougie Sutherland and all the non-executive directors Russell King, Anne Fahy, Nick Salmon, Gareth Edwards, and Nicholas Pollard be removed from the company.

The Notice does not seek the removal of CEO Debbie White.

Interserve said it expects to launch the finalised plan in the next few weeks and that it will be subject to approval by shareholders.

The firm is also “actively preparing alternative plans” to ensure the proposed transaction can be implemented in the event that shareholder approval is not forthcoming.