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Mouchel sets up takeover fighting fund

Banks have given consultant Mouchel a war chest to fight a potential hostile takeover by VT Group by relaxing one of its financial covenants.

The consultant was close to breaking its fixed charge cover covenant, which measures how easily a company can pay financing expenses. It was set to not fall below 2.0, but the consultant has renegotiated additional headroom to allow it to fall to 1.875.

“We felt it was necessary to seek a carve out in the existing agreement for potential bid defence costs,” said the company in a statement.

“We have therefore sought a temporary easement to 1.875 for the fixed charge cover covenant for the next 12 months.”

Chief executive Richard Cuthbert said the firm continued to trade in line with the board’s expectations.
The consultant will issue a full trading update for the six months to 31 January next Thursday, when it is expected to announce that it has been successful in retaining two Highways Agency Managing Agent Contractor deals for Areas 1 and 13. The deals are worth £400M to the firm over five years.

VT Group remains interested in Mouchel and has a deal on the table worth 260p per share.

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