ANDREW PELLING has kept his eyes on the Bloomberg screens over the past week to see that another of Croydon’s commercial “partners” appears to be on the brink – with Council Tax-payers possibly having to pick up the multi-million pound bill
Thank goodness it’s been a warm December, because severe doubts remain whether Enterprise-Mouchel, Croydon Council‘s new partner for road maintenance and snow clearance, could have coped with the sort of White Christmas we experienced 12 months ago.
When the £37 million, four-year deal was announced, Inside Croydon warned that Mouchel is a company on the brink of collapse. Since then, things have only got… worse.
The Mouchel part of the Enterprise-Mouchel partnership saw its share price at a new low yesterday of just 5 pence.
Things might get even worse for Mouchel once the City boys get back in their offices in numbers next week, because stockbroker Peel Hunt has put a valuation on the company’s stock of just a single penny. Even that seems to be a rather generous valuation when they add, “it is difficult to discern any meaningful value for the existing equity”. In other words, they do not think that Mouchel as a company has any value whatsoever.
It is all quite a come down. The high for Mouchel stock was £4.79 at Christmas 2007.
You would think that the people responsible for procurement at Croydon Council would have learned the lesson of getting too reliant on private providers. But Croydon – the council that scandalously awarded a school bus contract to an uninsured transport company – clearly doesn’t do due diligence very well.
The Mouchel deal looks like it will prove to be another waste of Council Tax money. The ruling Croydon Conservatives backed this deal when the cabinet member apparently “in charge” of this deal, Phil “Two Permits” Thomas, proudly announced it as a means of saving the borough money by making council-paid staff redundant.
Rochdale Council is ditching its £130 million link with Mouchel. Mouchel says it will have little impact on operating profit, a strong hint that this contract had worked out far more expensive for Mouchel to fulfil than they had expected.
Back in The City of London, Mouchel’s recent trading statement spoke euphemistically of “plans to restructure the balance sheet of the Group”, which probably really means some sort of fire sale of the company’s assets and some desperate begging of bankers to lend them more money on easy terms.
There is yet another new chairman of Mouchel due to start on January 9, David Shearer – no relation to Alan, even if these Mouchel chairmen seem to last less time than football managers.
Shearer’s background with accountancy giants Deloittes may suit his new company’s needs for hard-nosed decisions to try to save a company on the ropes, if not already on the canvas.
Let’s wish him a Happy New Year, as there will be plenty of grief ahead
Sadly for Croydon, with the global economy seemingly taking another downturn, this looks like another financial debacle courtesy of Croydon’s very own Captain Mainwaring, the local Tories’ deputy leader Dudley Mead, who is in charge of the finances and spoke so warmly of the advantages of the Mouchel deal to a council meeting as recently as last October. Doesn’t Cuddly Dudley read the FT?
- Thomas shows true grit with £37m of Croydon’s money (insidecroydon.com)
- Mouchel losses widen as it seals new bank deal (independent.co.uk)
- Mouchel interim chairman resigns (bbc.co.uk)
- Support services group Mouchel in debt turmoil (telegraph.co.uk)