Shares in outsourcer Interserve (IRV) are suspended down 37% at 6p after a majority of shareholders rejected the board's rescue plan.
Investors representing just under 60% of the share capital voted against the board's emergency plan to turn its debt into new shares, causing massive dilution.
With less than 40% support for its proposal, the board would seem to have little option but to put the business into administration so that it can continue operating as normally as possible while a buyer is found.
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Interserve employs 68,000 people worldwide including nearly 40,000 in the UK including workers at the Foreign Office, HMRC and the NHS. Around 70% of its annual £2.9bn revenues come from the public sector.
The rescue deal was opposed by US hedge fund Coltrane Asset Management, which controls 27.7% of the shares, and a group of sympathetic shareholders holding just over 30% of the company.
In its statement Interserve says that the board is 'convening an urgent board meeting to consider its options'.
It suggests 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'.
This would achieve much the same as its original deleveraging plan in terms of liquidity and the company's balance sheet.
The deleveraging plan would have given Interserve's lenders, mainly banks and hedge funds, 95% of the company in exchange for cancelling £485m of debt.
This would have left existing investors with 5% but if the company is put into a pre-pack administration these shareholders will be wiped out completely.
