Oct. 8 (Bloomberg) -- Mouchel Group Plc is talking to banks about its debt after an accounting error resulted in the erasure of 4.3 million pounds ($6.7 million) of profit from a contract and caused the stock to plunge.

A spokeswoman for the government-services company confirmed that Mouchel is in talks with its lenders, after the Financial Times reported the discussions with Royal Bank of Scotland Group Plc, Lloyds Banking Group Plc and Barclays Plc. Mouchel has 87 million pounds in debt and is attempting to avoid breaching a covenant, the newspaper said.

Mouchel plunged the most in more than nine years in London trading on Oct. 6 as the firm, which provides highway maintenance services, said Chief Executive Officer Richard Cuthbert resigned after the discovery of “an actuarial error.”

The company is receptive to takeover offers, the Financial Times reported, citing a person it didn’t identify.

The spokeswoman for the Surrey, England-based company declined to comment on speculation about a takeover when contacted by telephone today.

--Editor: David Risser

To contact the reporter on this story: Paul Dobson in London at pdobson2@bloomberg.net

To contact the editor responsible for this story: Mike Harrison at mharrison5@bloomberg.net