Sugden resigns but backing of banks gives Mouchel shares a boost

SHARES in Mouchel, the troubled infrastructure and maintenance group, rebounded strongly yesterday after it said its bankers were “fully supportive” of the company.

Mouchel also confirmed that interim chairman David Sugden had resigned just four days after being appointed to the post. The company, hit by a downturn in public sector spending and at risk of breaching its loan agreements, gave no reason for the departure, but Sugden had reportedly failed to win the backing of the group’s main lenders – which include Royal Bank of Scotland and Lloyds Banking Group – to take up the permanent role as chairman.

Sugden had replaced chairman Bo Lerenius last Thursday, saying that he would focus on Mouchel’s “clear strategy”.

The company said that his resignation followed “further discussions with the board and other key parties about the best way to secure Mouchel’s future”. Michael Lyons, senior independent director and a former BBC Trust chairman, will takeover from Sugden until a replacement is found.

The company also provided an update on its discussions with its lenders and said they were “fully supportive of the board and its executive team, which believes that Mouchel has strong and valuable businesses which need to be supported by a stable, long-term financial structure”.

Shares in the company rose by 44.2 per cent, or 5.75p, to 18.75p. Earlier this year they traded at over 150p.

Richard Cuthbert quit as chief executive of the beleaguered firm two weeks ago after it revealed that a statistical error and mounting risks to contracts would slice about 60 per cent off this year’s profits. Former Serco Group chief operating officer grant Grant Rumbles has been appointed as his replacement.

In early 2010, Mouchel had rejected a £330 million cash and shares offer from VT Group and this year has fended off takeover bids from Costain and Interserve.