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Utilities contractor Mouchel has struck a deal with lenders to keep the debt- ridden company from going under.
It announced this morning a debt-for-equity swap it said would safeguard existing contracts and the jobs of more than 8,000 employees.
RBS, Lloyds and Barclays agreed to buy all the group’s shares in exchange for writing off £87 million of net debt.
That leaves the company with £60 million of outstanding debt, which the board said was “appropriate for a company of Mouchel’s size and prospects”.
The restructuring is subject to shareholder approval at a general meeting on 24 August. Investors would receive a special dividend of 1p a share.
The company’s market valuation had fallen from more than £200 million in 2010 to £2.2 million.
Mouchel chairman David Shearer said in a statement: “As previously communicated to shareholders, our unsustainable debt levels meant the restructuring options under consideration would have resulted in limited value for shareholders.
“In reaching this agreement with our lenders, we have sought to ensure that our shareholders have the opportunity to recover some value from their investment. The restructuring ensures we will have an appropriate level of debt and the right capital structure to take the Company forward.”
Mouchel provides a range of infrastructure and business services to water companies and has a handful of environmental assessment contracts in the energy sector.
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