Mouchel sells rail business to SKM

Mouchel, the infrastructure and public sector outsourcing specialist with offices in Ellesmere Port, Liverpool and Manchester, has sold its rail engineering division to Sinclair Knight Merz.

SKM will pay £3.4m in cash to Mouchel (LON:MCHL ) at completion, and Mouchel will retain net realisable assets, principally money owed by debtors and work-in-progress of a further £2.5m. SKM will assist Mouchel in the collection of Mouchel Rail's trade debtors and work-in-progress, and will receive a 5% administration fee on all work-in-progress collected.

Mouchel is currently negotiating its financial terms with the banks, advised by KPMG, and has £87m of debt. The sale is the first of a predicted flurry of disposals to raise cash to pay off debt.

Mouchel has joint ventures with Liverpool City Council and Knowsley Council to provide services such as highways and planning advice.

For the year ended 31 July 2010, Mouchel Rail reported a pre-tax profit of £0.8m on net revenue of £13.6m. At 31 January, gross assets, subject to the disposal, were negligible.

Simon Collins, Mouchel's rail business unit director, will remain with Mouchel Rail under SKM's ownership.

The sale to SKM is expected to complete on 31 October.

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