Debt crisis at company given major NI Water contract
Published 01/08/2012 | 08:00
An infrastructure firm which was awarded a major contract with Northern Ireland Water at the beginning of the year says it is still on track to deliver the work despite crunch talks with lenders.
Mouchel, which employs 8,000 staff across the UK on roads and building projects, is in crisis talks with lenders over a restructuring plan as it struggles under a £100m debt mountain and Government spending cuts.
In the last year the firm's share price slumped to just 1.7p, giving the company a market value of just £2m, compared with two years ago when they were trading at 120p.
The company plunged to an £11.6m loss in the six months to the end of January while its net debt increased £7m to £104m.
In March NI Water announced it had awarded Mouchel an 18-month contract to deliver an "asset inventory". Mouchel said it would be employing up to 30 people on the project.
The company has worked with NI Water for over 20 years from Mouchel's office in Holywood, Co Down. Nobody from NI Water was available for comment.
Chief executive Grant Rumbles, who was appointed in October to rescue the floundering 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".
He added that work would continue as normal while last-ditch talks with lenders Royal Bank of Scotland, Lloyds and Barclays continued.
"We have continued to work with our clients, employees and key stakeholders to implement our strategic actions and are encouraged by the good progress made since the interim results," he said.
"Although the environment remains challenging, the actions we are taking will create a platform for long-term growth for Mouchel.
"The final piece to setting this platform for securing the long-term future of the business is to complete the restructure of the balance sheet and we remain on track to announce this by our financial end of year," he added.
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.
Level Mouchel's share price plummeted to from 120p in the past year