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Mouchel finances to be reviewed

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The Mouchel Group’s lending syndicate has called in accountancy and restructuring firm Deloitte to review the business..

Mouchel’s financial health is in question as it tries to negotiate debts of £190m. Cashflow is thought to have been affected by the loss of public sector contracts.

Its lending syndicate includes Royal Bank of Scotland, Barclays and Lloyds.

Deloitte will carry out a “targeted” review, focusing only on how the government contract changes will influence Mouchel finances.

Mouchel has issued several profit warnings, while Connaught and ROK, companies also dependent on state contracts, have collapsed.

Almost a third, around £65m, of the engineering consultancy group’s 190 million debt is scheduled for payment in October 2012.

One source said: “The question being essentially asked is whether the lenders should continue to support the company’s board, push for a sale or what the recovery would be if lenders pulled the plug.

“Any new arrangement needs to be in place 12 months before refinancing.”

If Mouchel needs to borrow more from the banks, they are likely to charge interest rates as much as 15%. Then lenders are likely to demand the company runs an emergency rights issue.

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