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WYG bank bailout agreed

Consultant White Young Green (WYG) is to delist from the London Stock Exchange and hand a 60.5% controlling stake to its banks.

Shareholders voted last week to back a restructuring proposal which will slash the firm’s debt from £103M to around £50M, lifting the constant threat of defaulting (NCE 9 December).

“We are absolutely delighted that through this challenging period our lenders, shareholders, clients and staff have continued to support us and believe in the future success of the business,” chief executive Paul Hamer told NCE after the vote.

“Upon completion of the refinancing we will have significantly reduced the level of the group’s debt, created a stable, long term financial future for the company, secured around 2,700 jobs and provided renewed confidence to our clients.”

“We have a platform from which we can refine the business. We are going to do less things but better and more efficiently.”

Paul Hamer

The firm will now apply for a listing on the Alternative Investment Market (AIM) stock exchange which imposes lower administrative burdens on companies than the London Stock Exchange. WYG shares are expected to be delisted from the London Stock Exchange on 4 February.

Hamer said that the firm still faced considerable challenges but said that this restructuring would give the firm a “solid platform” for its future business strategy.

“[The restructuring] completes part one of our strategy and gives us the platform from which we can refine the business,” he said. “We are going to do less things but better and more efficiently.”

The restructuring package involves WYG’s banks converting £52.9M debt into shares − giving them a 60.5% controlling stake.

Remaining shares will be owned by an employee trust, which will own 24.5%, and existing shareholders which will own 15%.

Hamer said creating the employee trust should enable every employee to own part of the company.

“We are delighted our lenders, shareholders, clients and staff have continued to support us.”

Paul Hamer

The banks have agreed to provide new lending facilities totalling £58.25M plus €38M (£34.2M) of committed bonding facilities which Hamer said would “help put WYG on a strong and sustainable financial footing”.

The restructuring came after the consultant encountered difficulty servicing debts of around £91.5M, built up by 18 acquisitions made since in 2003.

Recent tough trading conditions have pushed the company close to breaking its banking covenants.

The restructuring plus extra seasonal costs have pushed the firm’s total debt to £103M.

Readers' comments (1)

  • Smart move giving the employees 24.5% equity. But with the ongoing level of debt, difficult trading and reputation loss they will be a 'penny share' company for a long time.

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