Infrastructure firm Mouchel faces uncertain future amid talks
Tuesday 31 July 2012
The future of infrastructure firm Mouchel, which employs 8,000 staff, was hanging in the balance today as a deadline loomed for a make-or-break restructuring.
Mouchel, which works with councils across the UK and maintains much of the road and motorway network, is in crisis talks with lenders as it struggles under a £100 million debt mountain while it has also been rocked by Government spending cuts.
The group has been behind major UK building projects more than a century after Frenchman Louis Gustave Mouchel brought the patent for reinforced concrete to the UK in 1897 in a move that helped shape 20th-century civil engineering.
It was used in the first UK skyscraper - the Royal Liver Building - in 1909, the chimneys for Battersea power station and floating concrete structures called Mulberry Harbours used in the D-Day landings.
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 just £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 while its net debt increased £7 million to £104 million.
Chief executive Grant Rumbles, who was appointed in October to rescue the company, previously said a balance sheet restructuring was due to be announced by the end of July at the latest but admitted shareholders would see "only limited value".
It is understood the company is locked in last-ditch talks with lenders Royal Bank of Scotland, Lloyds and Barclays.
Options include pre-pack administration, although this is thought unlikely, or giving the banks shares in the company in return for writing off some of its debts.
Another option could see the Woking-based group, which also works with the Ministry of Defence and major defence contractors such as General Dynamics, Lockheed Martin and BAE Systems, look to raise money from other investors in return for shares.
Previous chief executive Richard Cuthbert stepped down in October in the wake of a profits warning and he was followed out of the door days later by chairman Bo Lerenius.
A new chairman, David Sugden, lasted just three days as the company lurched from one crisis to the next, but was replaced by David Shearer.
The new 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.
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