Mouchel – French for a fly?
No, Mouchel is another of those boring-sounding companies that, like larger outsourcing rivals Serco and Capita, has a surprisingly large role in running our lives. Although in Mouchel's case, not as large as it would like. The contractor runs variable speed limits on motorways as well as doing back-office work for councils. But the workload has slowed of late. Three years ago, it turned over £800m a year. In the year to August, revenues were down at £500m. And shares have slumped 94 per cent in the year to date.
Almost. Back in autumn, Mouchel's chief executive, Richard Cuthbert, departed in the wake of the discovery of a £4.3m actuarial error. The company admitted it would breach its banking agreements and executives rushed for the door. Chairman Bo Lerenius fled, then his replacement, David Sugden, quit after only four days in the job. Mouchel organised a debt deal with its lenders – but at a cost: the banks secured potential fees worth more than £10m and the option to swap debt for equity, up to 5 per cent.
But it could have been so different...
Yup, earlier this year Mouchel turned down a takeover bid from construction group Costain at 152p per share, and two years before that VT Group offered 292p. Today they are worth just 6p.
New chief executive Grant Rumbles walked into the storm back in October. The 53-year-old previously ran testing business Exova and worked as head of operations at Serco. He admits he's still having trouble securing new customers. "Until we get our balance sheet strengthened, it's tough to win new, large contracts," he said yesterday. He's musing a rights issue for the first quarter of 2012, but the decision seemed out of his hands when he admitted he'll be having "discussions with lenders as to how they would like to proceed". The beancounters at Ernst & Young are busy cost-cutting. Mouchel is also reducing its portfolio of more than 100 properties, with Mr Rumbles admitting it has a "lot less people", and half-empty buildings. The stock is "only one for the brave", said Andy Brown at Panmure Gordon.