Consultant White Young Green may de-list from the London Stock Exchange to service its banking covenants.
The consultant 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.
Adverse banking and working conditions prompted by the credit crunch have meant the company is close to breaking its banking covenants. The company has managed to defer the date for the bank to test whether it is breaking its covenants until the end of the month.
In a statement to the London Stock Exchange yesterday, the company said: “The test date for White Young Green’s financial covenants has been deferred to 30 September 2009 whilst discussions continue with the Group’s lenders. The Board expects that a further deferral of the covenant test date will be requested.
“In addition, the Board expects to announce the Group’s final results for the year ended 30 June 2009 during the second half of October. A further announcement will be made in due course as appropriate.”
According to Charles Sanley analyst Geoff Allum: “In order to service its debt, the company may choose a debt for equity swap, but this would be likely to force the company to de-list from the stock exchange as less than 25% of the company’s stocks would be available to be freely traded - a stock exchange requirement.”
Analysts Numis agree, saying that re-financing: “could materially dilute existing shareholders and lead to a de-listing.”