Mouchel set to breach its covenants

City A.M. Reporter
British infrastructure and maintenance group Mouchel said yesterday it was in talks with its lending banks regarding expected covenant breaches caused by a profit warning last week, and named a new interim chairman after incumbent Bo Lerenius resigned.

“The board is encouraged that the banks have been supportive and the discussions continue to be constructive with the objective of providing Mouchel with a stable funding structure,” a company statement read, adding that the banks had asked KPMG to provide a report to help the process.

Richard Cuthbert had quit as chief executive of the beleaguered firm a week ago after it revealed a statistical error and mounting risks to contracts would slice about 60 per cent off this year’s profits, halving its shares on the day.

As well as appointing former Serco’s chief operating officer Rumbles as chief executive, Mouchel said yesterday that Lerenius had resigned and its non-executive director David Sugden would step in as interim chairman.

In early 2010, Mouchel rejected a £330m cash and shares offer from VT Group, and this year fended off takeover bids from Costain and Interserve valuing it at around £120m. Shares in the group, which analysts now expect to post full-year pre-tax profit of around £5m, closed down by 17 per cent at 10.75p, valuing the firm at just £14.6m.

Mouchel, which builds and maintains infrastructure such as roads, railways and schools, said it would defer the intended publication date of its report and full-year accounts to 30 November.