The outsourcing group, Mouchel, looks as if it will be taken over by a consortium of banks in the UK after a complex deal which has been highly leveraged looks to go through. Barclays, Lloyds, and RBS have all agreed that they will purchase shares in the business services group in return for the company having nearly £90 million of its debt written off.
It is estimated that if the deal goes through, Mouchel is still going to have around £60 million of debt, but the company will survive, and its 8000 employees will have their jobs safeguarded. The company provides highway maintenance and payroll services for local authorities, and its collapse would be a serious problem for the employees of the company.
The agreement is going to see the company receive a special type of dividends from the various lenders. Then new shares are going to be issued in the company and it is estimated that the lenders are then going to own 80 percent of it. The current management of the company will hold the 20 percent remaining.
This is a radical restructuring that still has to be approved by the company’s shareholders. A vote is due to take place on 24 August and if it goes ahead then the company will be taken off the stock exchange in late September. Non-executive directors are also going to be appointed by the banks to the company’s board, although they are not going to be interfering with the management team of company.
Nearly 90 percent of the company’s revenue comes from governmental contracts and the company has been one of the most high-profile victims of the economic downturn in the UK as local authorities don’t have as much money as they did before. In the past few years the company’s share price has dropped enormously.