Consultant White Young Green may be forced to persuade its banks to swap debt for shares to avoid breaching lending coventants, analysts said this week.
The move could reduce the number of the firm’s shares in circulation, forcing it to withdraw its listing on the London Stock Exchange.
The consultant has built-up a huge banking debt of some £90M thanks to a spending spree in the years since 2003, when it bought 18 smaller companies.
Tough trading conditions during the recession have pushed the company close to breaking its banking covenants.
It has deferred the date for its lenders to test whether it is indeed breaking its covenants until the end of the month.
“To service its debt, the company may choose a debt for equity swap, but this would be likely to force the company to delist from the stock exchange as less than 25% of the company’s stocks would be available to be freely traded − a stock exchange requirement,” said Charles Sanley analyst Geoff Allum.
Analyst Numis agreed and said that re-financing: “could materially dilute existing shareholders and lead to a delisting.”