Mouchel Rebounds After Reiterating Banks ‘Fully Supportive’
Mouchel Plc rose the most on record in London trading as the U.K. provider of road maintenance services said its lending banks remained “fully supportive” of the board, even after its interim chairman resigned.
Mouchel climbed 44 percent to close at 18.75 pence in London trading, the biggest gain since the shares started trading in 2002. This gives the Surrey, U.K.-based company a market value of 21.1 million pounds ($33 million).
Interim chairman David Sugden resigned after taking the post last week, the company said in an e-mailed statement late yesterday. The stock fell to a record low on Oct. 13 as the company made top management changes and said it expects to breach banking covenants after an accounting error erased 4.3 million pounds of profit.
“The shares have been absolutely hammered in the week before that, so there’s going to be an element of relief bounce,” Andy Brown, a London-based analyst at Panmure Gordon said in a telephone interview. “Assuming the banks don’t want to pull the plug on it at the moment, then you’ll see a lot of volatility in its price the next few weeks,” said Brown, who has a “hold” recommendation on the stock.
“On the basis that every time they’ve opened their mouth recently they’ve had a profit warning, it’s a very uncertain outlook,’ he said. “This is a high-risk play at the moment for anybody.”
Mouchel said last week it was delaying reporting of the full-year results until Nov. 30 to allow accounting firm KPMG LLP to prepare a review of the accounts for lenders.
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