PROFESSIONAL services firm Mouchel today confirmed the completion of its refinancing, saying the deal gives it more stability.
The embattled group, which is the subject of takeover interest from several parties including the Costain Group, announced last October it was seeking to refinance its main banking facilities.
It said it had hoped to complete the deal by its March interim results announcement.
But today it said its main lenders, Barclays, Lloyds Banking Group and RBS, have signed a new arrangement worth £170m until March 2014.
Mouchel will pay interest of up to 4% on the new facility and will make two £7.5m repayments in July of 2012 and 2013.
However, if the firm fails to make a voluntary repayment of £30m by May 2012 the interest terms will increase and the group will be unable to resume dividend payments to shareholders until the payment is made.
Chief executive Richard Cuthbert said today: “This is an important turning point for Mouchel.
“It provides the group with stability and ensures that we can continue to compete successfully in our chosen markets.”
He added: “Although we are still operating in challenging conditions, the fundamentals of our business and the medium- to long-term opportunities for the group remain strong.
“Mouchel came to the stock market on the back of the major public service reforms of the 80s and 90s; the present Government’s policies will offer a second major catalyst to growth for Mouchel.
“With our new facilities and leading market positions in our core businesses of local government outsourcing, public sector consulting, highways and water, we look forward with renewed confidence to implementing our strategy, working with organisations across the UK public sector – and in selected overseas markets – to improve the quality and efficiency of public services.”
Mouchel currently provides a range of services under its 2020 brand to Liverpool and Knowsley councils, such as traffic management and landscaping.
Last year it announced a cost-cutting drive which included the closure of its Cunard Building offices in Liverpool this July, which will result in the transfer of its HR and finance departments to Oldham and the relocation of most of the 150 staff to existing locations in Liverpool’s Mercury Court and Ellesmere Port.
However, in a business update today, the group said it is confident of its medium- and longer-term outlook as, in an environment where all its clients face challenges to deliver higher quality services more efficiently, its skills will be more in demand.
Cost savings of £25m have already been realised, with more in the pipeline.
It is also pursuing £20m of outstanding payments in the Middle East and it said the potential sale of non-core businesses will help it meet its £30m repayment.
By the end of this month it said it will have orders of around £1.7bn and a pipeline of tenders and near-term opportunities of around £2bn.
Liverpool stockbroker Panmure Gordon welcomed today’s announcement as “positive news” and increased its share target price from 105p to 155p.
