Mouchel in rescue deal to save 8,000 jobs

But shareholders will see their stakes virtually wiped-out with a special dividend of 1p a share the only return before shares are delisted and rendered worthless as the company goes private.

Mouchel bosses have been in intense talks for weeks to strike the debt-for-equity swap which will see RBS, Lloyds Banking Group and Barclays waive £87m of debt in return for a major stake in the company.

The deal still leaves Mouchel saddled with £60m of outstanding debt which the firm described as “appropriate for a company of Mouchel’s size and prospects.”

Mouchel was due to default on its debts by the end of this month and lenders warned the firm would be placed in administration without the proposed restructure.

The deal is now dependent on shareholders’ approval on August 24, but was described as the only viable and deliverable option.

Shareholders have been braced for losses during a period which has seen the firm’s share price plummet.

Early last year Mouchel’s board turned down takeover offers from rivals Costain and Interserve for around 153p a share, saying the £170m offers significantly undervalued the company.

Six months later the then chairman and chief executive resigned as the extent of Mouchel’s financial woes became apparent.

Grant Rumbles (pictured), Mouchel’s replacement 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.”