Mouchel secures bank refinancing

27th Jan 2011 11:31

Outsourced services provider Mouchel, which has rejected an approach from construction and engineering group Costain, has secured new banking facilities. Mouchel will have total facilities of £170m extending until the end of March 2014. The interest margin is 3.1% to 4%. There are two repayments of £7.5m at the end of July 2012 and the end of July 2013. There is also an additional voluntary repayment of £30m that can be made by the end of May 2012. Although this does not have to be made there are severe penalties if it is not. The interest margin would increase by 2 percentage points and Mouchel will have to issue warrants over 5% of the enlarged capital of the company. The issue price will be the lower of 75p and 80% of the share price at the time. Shareholders will not get any dividends until the £30m is repaid. There will be an exceptional charge in the 2010-11 results relating to the writing off of capitalised arrangement fees relating to the previous refinancing. Broker Peel Hunt says that the interest margin is slightly better than it thought it would be but it questions whether the £30m repayment can be made with the sale of assets. Hawkpoint has been appointed to advise on non-core disposals. Peel Hunt forecasts net debt of £98.5m at the end of June 2011, falling to £84m at the end of June 2012. Of course, there will be seasonal fluctuations during the year. Mouchel is cautious about trading but it has already secured £25m of annual cost savings. At the end of January 2011, the order book should be around £1.7bn.Costain has talked to Mouchel shareholders as well as its own shareholders and last week it came up with an enhanced potential bid of 0.5531 of a Costain share and 30p in cash for each Mouchel share. At a Costain share price of 223.5p, this values Mouchel at 153.6p a share. Mouchel has rejected the bid approach. However, Mouchel says that it is "actively reviewing all of the approaches that we have received and our other options".