Ailing infrastructure firm Mouchel saved by banks


Infrastructure firm Mouchel was pulled back from the brink today as a syndicate of banks agreed to wipe out a chunk of the ailing firm's debt in a last-minute deal.

Mouchel, which provides consulting and business services on road building and other public sector projects, warned it will collapse under its £140 million debt pile at the end of this month if shareholders do not approve the debt-for-equity swap.

Royal Bank of Scotland, Lloyds and Barclays will release £87 million of debt in exchange for a controlling stake in the business, safeguarding 8,000 jobs and leaving Mouchel with a more sustainable £60 million-worth of debt.

The group, which has been hit by Government spending cuts, has been behind major building projects more than a century after Frenchman Louis Gustave Mouchel brought the patent for reinforced concrete to the UK in 1897.

Mouchel's woes were compounded last year when Richard Cuthbert resigned as chief executive after the company revealed a £4.3 million accounting error.

Chief executive Grant Rumbles said the restructuring represented the "best possible outcome" for stakeholders, as well as safeguarding existing customer and supplier contracts and preserving job security.

The group last year turned down takeover offers from rivals Costain and Interserve for more than £150 million, saying they significantly undervalued the company.

But since then its fortunes have dramatically declined. Its shares are now worth just 1.7p, giving the company a market value of £2 million, compared with two years ago when they were trading at 120p.

The company slumped to an £11.6 million loss in the six months to the end of January.

The new deal will ultimately see Mouchel shares delisted on September 25 after payment of a 1p special dividend to shareholders. The agreement is subject to the approval of investors at a general meeting on August 24.

Andy Brown, analyst at Panmure Gordon, said: "While this is a poor outcome for shareholders it should ensure that existing contracts are delivered and employment of around 8,000 people is maintained."

The management team has carried out a strategic review, which will see it make £21 million of cost savings - most of which are expected to have been implemented by September.

It is understood that these mainly relate to "systems and processes" and will not necessarily involve significant staff cutbacks.


Start your day with The Independent, sign up for daily news emails
ebooksA special investigation by Andy McSmith
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £45,000: SThree: SThree Group have been well e...

Ashdown Group: IT Manager / Development Manager - NW London - £58k + 15% bonus

£50000 - £667000 per annum + excellent benefits : Ashdown Group: IT Manager / ...

Recruitment Genius: Sales Consultant / Telemarketer - OTE £20,000

£13000 - £20000 per annum: Recruitment Genius: Scotland's leading life insuran...

Ashdown Group: Training Programme Manager - City, London

£40000 - £45000 per annum + benefits : Ashdown Group: Training Programme Manag...

Day In a Page

NHS struggling to monitor the safety and efficacy of its services outsourced to private providers

Who's monitoring the outsourced NHS services?

A report finds that private firms are not being properly assessed for their quality of care
Zac Goldsmith: 'I'll trigger a by-election over Heathrow'

Zac Goldsmith: 'I'll trigger a by-election over Heathrow'

The Tory MP said he did not want to stand again unless his party's manifesto ruled out a third runway. But he's doing so. Watch this space
How do Greek voters feel about Syriza's backtracking on its anti-austerity pledge?

How do Greeks feel about Syriza?

Five voters from different backgrounds tell us what they expect from Syriza's charismatic leader Alexis Tsipras
From Iraq to Libya and Syria: The wars that come back to haunt us

The wars that come back to haunt us

David Cameron should not escape blame for his role in conflicts that are still raging, argues Patrick Cockburn
Sam Baker and Lauren Laverne: Too busy to surf? Head to The Pool

Too busy to surf? Head to The Pool

A new website is trying to declutter the internet to help busy women. Holly Williams meets the founders
Heston Blumenthal to cook up a spice odyssey for British astronaut manning the International Space Station

UK's Major Tum to blast off on a spice odyssey

Nothing but the best for British astronaut as chef Heston Blumenthal cooks up his rations
John Harrison's 'longitude' clock sets new record - 300 years on

‘Longitude’ clock sets new record - 300 years on

Greenwich horologists celebrate as it keeps to within a second of real time over a 100-day test
Fears in the US of being outgunned in the vital propaganda wars by Russia, China - and even Isis - have prompted a rethink on overseas broadcasters

Let the propaganda wars begin - again

'Accurate, objective, comprehensive': that was Voice of America's creed, but now its masters want it to promote US policy, reports Rupert Cornwell
Why Japan's incredible long-distance runners will never win the London Marathon

Japan's incredible long-distance runners

Every year, Japanese long-distance runners post some of the world's fastest times – yet, come next weekend, not a single elite competitor from the country will be at the London Marathon
Why does Tom Drury remain the greatest writer you've never heard of?

Tom Drury: The quiet American

His debut was considered one of the finest novels of the past 50 years, and he is every bit the equal of his contemporaries, Jonathan Franzen, Dave Eggers and David Foster Wallace
You should judge a person by how they peel a potato

You should judge a person by how they peel a potato

Dave Hax's domestic tips are reminiscent of George Orwell's tea routine. The world might need revolution, but we like to sweat the small stuff, says DJ Taylor
Beige is back: The drab car colours of the 1970s are proving popular again

Beige to the future

Flares and flounce are back on catwalks but a revival in ’70s car paintjobs was a stack-heeled step too far – until now
Bill Granger recipes: Our chef's dishes highlight the delicate essence of fresh cheeses

Bill Granger cooks with fresh cheeses

More delicate on the palate, milder, fresh cheeses can also be kinder to the waistline
Aston Villa vs Liverpool: 'This FA Cup run has been wonderful,' says veteran Shay Given

Shay Given: 'This FA Cup run has been wonderful'

The Villa keeper has been overlooked for a long time and has unhappy memories of the national stadium – but he is savouring his chance to play at Wembley
Timeless drama of Championship race in league of its own - Michael Calvin

Michael Calvin's Last Word

Timeless drama of Championship race in league of its own