Consultant White Young Green (WYG) confirmed that it was cutting a further 324 jobs this week as it struggled to restructure its £91.5M debt.
The latest job losses are in addition to 235 redundancies announced in February as part of a streamlining strategy which could result in a total of 800 job cuts by the end of June (NCE 5 March).
The strategy was coupled with WYG’s intention to restructure its debt to prevent it from breaching its banking covenants.
The covenants dictate the amount of borrowings the company is allowed relative to earnings before interest tax depreciation and amortisation (EBITDA).
Struggling for attention
WYG group finance director David Wilton told NCE this week that the firm was struggling to hold the banks’ attention on the issue. He said it would be difficult to resolve the matter before the end of its financial year in June.
“We are still likely to breach the covenant relating to EBITDA,” said Wilton. “The banks are very busy and we are struggling to get airtime. Our expectation is that this will be resolved, but it’s outside our control.”
“We are still likely to breach the covenant relating to EBITDA. The banks are very busy and we are struggling to get airtime.”
David Wilton, White Young Green group finance director
Wilton said the likely outcome of the debt restructure would be much higher interest and much more onerous lending terms. He said that, rather than focusing on how to service the debt at higher interest rates, WYG would be cutting the debts by chasing payments from clients.
“We are working hard at chasing amounts owed to us, which we have not been very good at in the past,” said Wilton.
“We believe we are three quarters of the way through the restructuring [of the business],” said WYG chief executive Paul Hamer, who took the helm at WYG after Lawrie Haynes resigned in January.
Of the likely 800 job cuts, Hamer said he anticipated 60% to come from the UK engineering business, 25% from WYG Ireland and the rest from other regions.
State of play: consultants’ sector overview
Support services marginally underperform.
The support services sector marginally underperformed a weak market during the course of the week ending 17 May reflecting profit taking and poor sentiment following weak United States retail sales data and Mervyn King’s comments on 13 May.
The engineering consultancy sub sector has significantly underperformed, down c.6.5% (actual), despite a vacuum of newsflow.
Mouchel’s shares were the best performer, down c.1% (actual).
- NCE’s share tracker is brought to you in association with Numis Securities