01 August 2012

The Board of Mouchel Group plc ("Mouchel" or the "Company"), the infrastructure and business services group, announces that following a period of negotiations with its Lenders, it has agreed a restructuring of the Company, which will place the business on a firm financial footing for the future. This will be achieved by implementing a Debt for Equity Swap and amending the terms relating to the Company's outstanding debt facilities.

As previously communicated to Shareholders, on 29 March 2012 and 11 June 2012, in light of the unsustainable levels of debt on the Company's balance sheet, the restructuring options under consideration would have resulted in limited value for Shareholders. In reaching this agreement with its Lenders on the terms of the Restructuring, the Board has sought to ensure that Shareholders have the opportunity to recover some value from their investment. Accordingly, Shareholders will be entitled to receive a special dividend of 1 pence per Ordinary Share following, and conditional upon, completion of the Restructuring. Following payment of the special dividend, shares entitled to the special dividend will be repurchased by the Company, for which Shareholders will receive no further payment.

Over the past six months, the Board has explored extensively various potential means of addressing the Company's current financial position. The Board believes that the Restructuring is the best available means of preserving the Group's business, including safeguarding its existing customer contracts and job security for more than 8,000 employees, and represents the only viable and deliverable option for delivering value to Shareholders. The Restructuring, achieved with the support of the Company's Lenders - RBS, Lloyds Banking Group and Barclays - will enable Mouchel to continue with business as usual.

Under the terms of the Restructuring, the Debt for Equity Swap will comprise the Lenders together releasing £87 million of the Group's existing debt liabilities for a majority interest in the Company. This will leave the Company with £60 million of outstanding debt, a level the Board believes appropriate for a company of Mouchel's size and prospects. Mouchel is currently dependent upon the support of its Lenders and a default is expected under the terms of its existing borrowings on 30 August 2012 unless it restructures its existing borrowings. The Board believes that the Restructuring will provide a sustainable capital structure for Mouchel to operate its business. Though the underlying business is performing broadly in line with management expectations, performance in the current year continues to be impacted by the financial uncertainty surrounding the Group and associated costs involved in the operational restructuring of the business.

The Board believes there are good opportunities across both divisions, Mouchel Infrastructure Services and Mouchel Business Services. Whilst the Board believes that Mouchel is stable and has a strong underlying business, an appropriate and sustainable level of debt financing will greatly improve its perception in the marketplace and with its customers and suppliers. In addition, the significantly reduced interest payments resulting from the Restructuring should contribute positively to the Company's earnings and cash flow and enable the business to move forward with renewed vigour.

The Restructuring is subject to the approval of Shareholders at the General Meeting to be held on 24 August 2012. Assuming that Shareholders vote in favour of the Restructuring, the proposal will result in the Delisting of Mouchel, which is expected to take effect on 25 September 2012. Following the Delisting, the Restructuring will complete.

Commenting on the restructuring, David Shearer, Mouchel's Chairman said:
"As previously communicated to shareholders, our unsustainable debt levels meant the restructuring options under consideration would have resulted in limited value for shareholders. In reaching this agreement with our lenders, we have sought to ensure that our shareholders have the opportunity to recover some value from their investment. The restructuring ensures we will have an appropriate level of debt and the right capital structure to take the Company forward."

Commenting on the restructuring, Grant Rumbles, Mouchel's Chief Executive said:
"We are pleased to announce today the terms of our financial restructuring, creating a stable platform for the long term future of Mouchel.

Given the circumstances, we believe the restructuring represents the best possible outcome for all of our stakeholders, safeguarding our existing customer and supplier contracts and preserving job security for Mouchel's employees.

Throughout this challenging period, we have continued to work with our customers, suppliers, employees and other key stakeholders to implement our strategic actions and we are encouraged by the progress made. With the continued support of our lenders, we now look to take Mouchel forward from here as a privately-owned company."

This press release should be read in conjunction with the full text of this announcement. A copy of the Circular containing the Notice of General Meeting will be posted to Shareholders later today and a copy will also be made available on the Company's website: www.mouchel.com.

distributed by