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Real-Time news about Mouchel Group (London Stock Exchange): 0 recent articles
|nathandc: However, on Friday Mouchel said shareholders had rejected the plan and that it expected to soon appoint administrators who would sell all of its assets to affiliates of its lenders and management.
How can the company be sold off to management they created this mess drove the share price down deliberately and miss managed the company|
|bubble pricker: nathan, if the shareholders vote against the deal, the company will go into administration and shareholders will receive nothing.
Why are all the shareholders on here complaining? You were told very clearly by the company in the RNS dated 11 June 2012:
"All the options being considered will result in there being only limited value for existing shareholders".
There was plenty of time to sell at 3-4 times the current share price.|
|pug151: serious trouble - i agree
what was mentioned was share dilution not mechanism
my point is that a covered warrent would allow dilution at a much higher future share price as present market cap is tiny
this will happen soon and i would expect a sharp share price rise - not enough if you entered 12 months ago clearly but for those who buy now .....|
|knigel: Thanks Sunday Times for your help in knocking a third off the share price in three days....however personally I was thinking the share price looked a bit toppy and now the share price is looking oversold...13-14p is fair value until results imo|
|htrocka: old news...but for those that missed it..dated 6th Dec..pre-Shearer)
The new chief executive of Mouchel could receive up to £1.45 million in salary and bonuses if he can turn the company around in the next two years.
On top of his £320,000 annual salary, Grant Rumbles is eligible for a bonus worth 150 per cent of his salary in the first year and 100 per cent the following year.
New finance director Rod Harris, who earns £200,000, can receive a bonus worth 100 per cent of his salary and then 75 per cent. The bonus scheme is based on pre-tax profit targets along with successful refinancing and net debt reduction goals.
The details were provided in the company's annual report as it posted a £64.8m loss for the year to July 2011 on turnover of £551.4m, compared with a £14.8m loss the year before on sales of £632.6m.
Mouchel's remuneration committee said the level was "appropriate" because the pair are on lower salaries than both their predecessors and lower than would otherwise have been necessary to recruit them.
It said there are also significant short-term challenges facing the business and that there will be no long-term incentive award until it is stabilised.
Mr Rumbles told Construction News that he and Mr Harris are now "looking at every option" as they conduct a "deep dive" into the business including a rights issue, a debt for equity swap, disposal of divisions, or the ultimate sale of the firm.
The review is expected to be completed by the time the company announces its interim results in March. It comes after Mouchel negotiated £180m of new banking facilities last Tuesday to avoid breaching its existing loan covenants.
Mr Rumbles said his 25 years with services giant Serco made Mouchel a good fit for him.
He added: "I'm very good at fixing problems and frankly Mouchel is a problem.
"We had 8,000 people here who were in a great deal of difficulty and I thought I could help."
Mr Rumbles said Mouchel had a strong underlying business and pointed out that 90 per cent of its work was in the public sector at the time of the Comprehensive Spending Review last year.
At the same time, takeover bids and internal disruptions had all damaged chances of winning new work, Mr Rumbles said. But he was also clear that the company was not "fit for purpose" as it stands.
Accountants Ernst and Young are looking into a restructuring of the company, which Mr Rumbles says is operating with systems designed for a firm three times its size for example, using a £5m SAP accountancy software system when a £1m system would suffice.
The company also had to pay £4.5m of exceptional items relating to poor contracts, including a business process re-engineering contract in the Middle East.
He said: "Some of the choices in the business haven't been the best and the way it bid for contracts, it possibly did not understand some of the risks it was taking.
"In terms of our existing clients and doing additional work with them, I don't think it is a problem.
"In terms of winning new, big contracts, it is a problem, and I think it will be a problem until we get our balance sheet sorted out."
Mr Rumbles could not rule out cuts to the workforce, although he emphasised that skilled staff are central to Mouchel's future.
The management consultancy division, which recorded a £26m drop in sales last year, could be where jobs are shed.
In February and March, when Interserve and Costain made takeover bids, the firm's share price was at 155p. The share price was 10p by the end of last week.
Mr Rumbles declined to comment on recent approaches.
· Director salaries and benefits for 2011 rose to £1.3m from £947,000 the year before.
· Former chief executive Richard Cuthbert and former FD David Tilston earned £410,000 and £250,000 respectively and were not on a bonus scheme.
· Former BBC Trust chairman Sir Michael Lyons saw his salary rise from £38,000 to £300,000 on 15 October 2011 as he went from part-time to full-time to lead the Mouchel board. He is paid on a pro rata basis for three months; his pay falls to £200,000 a year thereafter.
· After chairman Bo Lerenius stood down, David Sugden was in place for just two days before he resigned. Mr Lyons is now interim chairman, though the company has formed a shortlist.
· Rod Harris is the third finance director in a year after Mr Tilston, who joined in September last year and Kevin Young, who had been at the firm since 1999.
· The annual results were delayed by a profit warning and an actuarial error which reduced profits by £4m, while annual results reveal a reduced contract win rate and liabilities that outweigh its assets.
· The company sold its rail business to Sinclair Knight Merz for £3.4m and energy division to Mott Macdonald for about £3m to help tackle the £87.7m of debt|
|howdlep: No 7am RNS stating they "know of no reason for the share price movement". The fact that the share price had dropped from well over 250p to 6p still wouldn't have prevented management having to bring out a denial RNS. So can we assume bid talks are ongoing (see post 2728)?
I am expecting another big volume day today and hopefully an share price rise to match yesterday's. We will see shortly.|
|deanroberthunt: The share price of business services firm Mouchel has halved over the last year, and shareholders may be ruing the board's decision to reject a 294p per share offer from sector peer VT Group, but Numis Securities thinks the company could be about to turn a corner.
Accentuating the positive Numis observs that Mouchel "has attractive leading market positions and it is operating within its covenants." The company is comfortable with net debt of around £85m for the year to July 2011 and in case of emergency there is always the prospect of selling off some of its sought after assets. Numis suggests the Water business, for instance, could be sold for £30m although the sale would dilute earnings in the short term.
On the downside, Numis says there are still doubts on forecast earnings for next year (the company is declining to give guidance), while the effects of the company's restructuring plan and the effect of public sector spending cuts not yet known. The company is also still on the lookout for a new finance director (FD), which adds to uncertainty.
Nevertheless, the broker has upgraded the stock from "hold" to "add", with a price target of 175p. "We are buyers on weakness as we believe shareholder pressure will increase to deliver value and that the assets are strategically attractive," Numis analyst Francesca Raleigh said.
Meanwhile, Panmure Gordon is sticking with its "buy" recommendation after having a chat with Mouchel's management, though it has reduced its target price from 210p to 190p to reflect new uncertainty for the group in the wake of Wednesday's trading update.
"The Mouchel share price has been very weak of late and the valuation is at the low end of the range. The shares continue to offer a 4% dividend yield, which we believe is attractive in the current climate. Medium-term the structural revenue drivers remain positive for the group," Panmure analyst James Cooke believes.
What a difference a year makes.|
|indomie: Here are the reason's why I've shifted to a positive stance on MCHL at current levels.....
(1) Improved Market Outlook - General mkt for consultants seen to have become more stable, with strong 18-24mths recovery (see IC article above).
(2) Middle East Debts - There appears to be imminent news on the Nakheel Middle East debt, with payments made to creditors by end of next month. MCHL has a disputed claim for £20m, so assuming it settled for 20% less and it decides to sell the sukuk bonds on - should see a cash inlow of approx £15m soon.
(3) Middle East Unit Sale - The only reason I can see the sale of this unit being delayed so long is that it is in some way linked with the Nakheel debt settlement. Either the 'investment partner' wants to buy the debt or will only buy some or all of the unit when this issue is resolved. Either way, the sale of this unit should net more cash for MCHL - would expect it to be announced around the same time as Nakheel settlement at end of June (unless its fallen through).
(4) UK Non core unit sales - Sales process for the non core units should be well under way by now and would expect an update on progress in our next RNS. These sales, plus the middle east unit, must surely raise at least £15m - which would meet the key £30m milestone for the resumption of dividends (though I'd prefer share buybacks if the price stays at these levels!).
(5) June IMS - if states MCHL's markets are now stable (perhaps with some signs of recovery) should help turn sentiment for the firm.
(6) Director Buy - 75,000 is not much, but not insignificant either and is a good buy signal imo.
(7) Share Price - MCHL trades at huge discount to sector, with most listed consultants rallying to a p/e of high single digits. MCHL - as the IC story posted above highlights - is still rated at a lowly p/e of 4.4!!!! Crazy! Most competitors are now at least double this and the long term average is a p/e over 20 - that means MCHL share price could more than quadruple over next couple of yrs!
(8) Takeover - MCHL's Board sent an important signal in its talks with IRV in that it is finally prepared to recommend offers to shareholders. The Board also crucially accepted that there may be strategic benefit as part of an enlarged business. If this is the case, then would expect MCHL to pro-actively seek to address this in the future, by seeking out a preferential merger partner in private talks rather than in public (much like Scott Wilson did) or an all share deal with someone like Tribal TRB.
(9) Cost Savings - 2011 will see £17m of the cost cutting measures flow to the bottom line (11/12 - full £32m) and that should mean a strong recovery in annual results when announced. There will be some some further exceptionals, but the vast majority have already been put through the accounts.
(10) Pension - MCHL have flagged a big reduction in their pension deficit this year, which could free up several million in top up payments over the next couple of years.
(11) Better Cash Flow & Net Debt - Focus on cash and no dividends this year means that further reductions in the net debt position should be possible, on top of any creditor payments or asset sales.
(12) Huge Overseas Market Potential MCHL has shown how it can leverage its brand and experience overseas through its Australian JV with Downer (with recent contracts wins hitting the bottom line from H2). There is real scope to grow that unit beyond highways and also for Australia to act as a spring board into East Asian markets imo.
(13) Improved Local Government Business - Seems clients are now actively looking to place more work with MCHL, but bid timelines mean could be another 12 mths before we see this on bottom line.
The exception is existing contract expansion......Bournemouth Council's Leader has said this in the last few days.....
"Our medium term financial plan shows a challenge of about £10m for the next two years," he said.
"There is only one way to rise to that challenge, and that is ever more efficient ways of working and delivery on our front line services.
"And for that we will expand on the incremental partnership with our private sector partner (Mouchel)."
(14) Sheffield Council PFI Scheme - Outside chance that CarillionMouchel - the JV partnership led by Carillion - can win this large contract. If so, it would accelerate recovery for the firm and the share price will rocket, if not, recovery will take longer. Preferred bidder will be appointed in June so MCHL will need to manage newsflow on this carefully - i'd say current share price rules this deal out. Recent change in council leadership may also come into play.
So, all in all I don't see why MCHL hasn't been re-rated like the rest of the sector - but it must only be a matter of time. Much will depend on the IMS in a couple of weeks if it shows progress on trading and debt, then the share price should start to climb again would expect £1-£1.20 a share quite quickly in that scenario and when the economy recovers and growth returns, then £2.50-£3 a share is more than possible - although still merger/takeover potential in the meantime.
Unlike some on here, I'm glad MCHL did not accept IRV's derisory offer and am sure in time IRV will look foolish for getting cold feet and not doing the deal at the agreed price.|
|spot1034: Last year Hill bought quite a lot of SWG in the market before putting in a bid, which they subsequently sold on to URS at a healthy profit. Perhaps the present MCHL share price - a huge discount to what two bidders think the company is worth - might tempt them to try the same thing again.|
|indomie: dtay0880 - there are limits on the number of contracts that can be awarded to one bidder by the Highways Agency as I understand it and this was one concern MCHL had with their interest as both leading players in that sector. (another was that COST could get bought out itself before a deal was concluded as happened before with VT Group). however, the league table from the HA also puts MCHL in the premier league of suppliers and COST would become the clear mkt leader with a tie up. that's why i dont understand IRV's mischief - it's got a terrible record with the Highways Agency and the MCHL tie up would have had great medium to long term potential. MCHL's accounts are also weighted towards the 2nd half, not least because this is when the majority of cost savings will start to flow through to bottom line and full contribution from recent contract wins is felt.
still a number of possible scenarios here......
1. COST go back to MCHL with an improved offer and gets a board recommendation. MCHL's Board will find it impossible to recommend any proposal lower than COST's best one in the past due to 'execution risks' and own perceived valuations on business. In this case, MCHL will want certainty and so would expect COST to announce full formal offer at same time. COST may want to complete due diligence 1st which could add another couple of wks to process.
2. COST go back to MCHL but unable to agree terms. Either goes hostile (and buys up some big holders straight away as it knows them well after recent months) or it withdraws and seeks other smaller 'bolt on' opportunities. This may well be another reason for the delayed RNS as firm may want to announce another deal at same time as announce no longer in MCHL offer period - or could just be weighing up options in talks with big mchl shareholders.
3. COST not gone back to MCHL at all and instead in discussions with other potential targets. I'd say this is the least likely based on current MCHL share price and stated acquisition strategy.
One of the previous parties could come back to the table ofcourse (the overseas firm - not IRV for the moment due to their RNS) and agrees a deal - sounds as though from analyst meeting this was their preferred partner but had own issues with doing an overseas deal. New proposal from a completely unknown party could also come forward (such as Enterprise) - this is the time to buy MCHL, not in a year or two when its share price has recovered (IRV's share price has already spiked 50% this yr).
Due to MCHL's need to put in place a timetable for the sale of 'non core' assets, whatever happens any deal has to be concluded quickly as Middle East sale already close and auction for other assets also likely to be by end of this year.|
Mouchel share price data is direct from the London Stock Exchange