Support services firm believed to be watching closely for consultant's debt position to deteriorate

Support services firm VT Group has reiterated the case for its takeover of consultant Mouchel but said the firm had refused to enter talks over any deal.

In a trading update this morning, it said: “In late 2009, we made two approaches to Mouchel with a view to acquiring the business. The board of VT believes that a combination would represent a strategically compelling proposition.

“The enlarged group would continue to have a strong focus on the public sector and its increased scale and enhanced capabilities would provide greater access to larger contract opportunities.”

However, it added: “To date, Mouchel has refused to enter into any form of discussions.”

Any move by VT would follow its offer of 260p per share in December, which valued the company at £276m. Mouchel rebuffed that, allegedly seeking 300p.

Sources say that VT is waiting for news over whether Mouchel will stay within its £190m credit facility.


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VT already made an offer of 260p per share in December

There has been no movement since December and several analysts this week described the proposed deal as having gone “unusually quiet”.

Mouchel's overall borrowing at the end of its financial year on 31 July 2009 was £180.7m, which left it with headroom of £9.3m.

However, at a trading update on 11 December the company said that borrowing at its half-year on 31 January would be above the figure, owing to weak trading in Dubai, where it has a joint venture with troubled developer Nakheel. In March it will come under further pressure when the facility falls to £180m.

According to two sources close to VT, which has an estimated war chest of £350m, the firm is hoping its bargaining position will strengthen if Mouchel comes under financial pressure.

One said: “VT is well aware of Mouchel's financial position and will make it sweat until it is ready to move.”

In the trading update, VT pointed to its order book of £4bn and the fact it had been named preferred bidder by the Highways Agency on a four-year £25m maintenance contract.

The group's cash position was £25m at the end of 2009.

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