Deloitte to Carry Out Financial Review at Mouchel

Lucas Gilmore, “Big 4″ observer
December 02, 2010 /

With the growing concerns over the financial future of Mouchel Group, an engineering consulting and design group, its lenders have appointed Deloitte to conduct a financial review of the firm’s future cashflow.

Deloitte will have done the financial review prior to Mouchel’s plan to refinance its £190m debt pile. The accounting and restructuring firm will find out how the future cashflow of Mouchel would be affected by the drop in its contracts with the government.

Warning signals from Mouchel Group regarding its profits with its contracts with the government have prompted the lenders to appoint Deloitte to conduct the financial review. Mouchel is among the firms, including Connaught and ROK, that were strongly hit by the public sector spending reductions.

Mouchel’s bank debt of £190m costs the firm 365 basis points at present. The firm is bound to complete the payment of nearly one-third of the total debt by October 2012.

A PricewaterhouseCoopers audit has pushed Mouchel to be more careful in its shelling out of amounts for various projects. This was followed by a profit warning released by the firm in October fourteen days prior to its full-year results.

The financial review should be arranged completely one year prior to the actual refinancing as stipulated in the firm’s accountancy rules.

Sources said that banks are likely to lend Mouchel with very high interest rates, probably between 12 to 15 percent, if they should be obliged to do so. This might force the lenders to require Mouchel to run an emergency rights issue, the sources added.

 

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