As part of proposed restructuring, Mouchel shareholders will receive 1p/share dividend and lose holdings for no payment
Shareholders in struggling motorway maintenance and bridge building company Mouchel will see their investment virtually wiped out under the terms of a rescue deal with the company’s banks.
If the arrangement goes ahead – and it needs to be approved by investors – they will receive a special dividend of just 1p a share, with their holdings then taken back by the company for no payment. This follows a warning in June that a restructuring would leave little for shareholders. Without the deal, Mouchel warned it would default on its borrowings on 30 August and would appoint an insolvency practitioner, leaving no value at all for shareholders.
The deal, however, will protect several thousand Mouchel employees.
In 2010 Mouchel received a 294p bid from VT Group which came to nothing, and last year there were a number of offers at around 150p a share from the likes of Costain. Since then tThe company has recently suffered contract mistakes, management changes and tough trading, thanks to the coalition’s austerity drive.
With the latest restructuring news, its shares have dropped 1.2p to the deal price of 1p.
Under the terms of the debt for equity deal, the company’s lenders Royal Bank of Scotland, Lloyds Banking Group and Barclays, will exchange £87m of its liabilities in return for a majority stake. This will leave the company with £60m of borrowings which it said would allow it to move forward. Chief executive Grant Rumbles said: “Given the circumstances we believe the restructuring represents the best possible outcome for all our stakeholders, safeguarding our existing customer and supplier contracts and preserving job security for Mouchel’s employees.
Analyst Andy Brown 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.”