Tue, 28 Aug 2012 | ADMINISTRATION
Mouchel, a consulting and business services firm for public service projects, is to enter a pre-pack administration.
The firm's lenders are set to take it in hand after investors and shareholders failed to agree to give banks shares in return for erasing a large chunk of its £140 million debt.
Lenders RBS, Lloyds Banking Group and Barclays are set to receive the assets in a deal that will wipe out shareholders but preserve the company's 8,000 jobs and honour its ongoing contracts.
Mouchel's problems arose after the government implemented heavy spending cuts. This left the business with significantly less work and forced it to look into alternative plans for the future.
The lack of shareholder support for the exchange of debt reduction for shares came as something of a surprise because the deal would have seen them paid a dividend of 1p a share. However, shares have now been suspended after trading at less than 1p, compared with two years ago when they were worth 120p.
The business has faced a number of challenges in recent years, including the resignation of chief executive Richard Cuthbert following a £4.3 million accounting error. The firm then slumped to a £11.6 million loss in the six months to the end of January.
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