Consultant White Young Green is to delist from the London Stock Exchange and hand a 60.5% controlling stake in the firm over to the banks.
Shareholders voted this afternoon to back the restructuring proposal (NCE 9 December) which will see the firm’s debt slashed from £103M to around £50M and so lift the constant threat of defaulting on its current lending terms.
“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,” said chief executive Paul Hamer after the meeting. “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.”
The firm will now apply for a listing on the Alternative Investment Market (AIM) exchange which will remove much of the firm’s administrative burden. It should delist from the London Stock Exchange on 4 February.
“The approval by shareholders of our restructuring has endorsed a fresh start for WYG”
WYG chief executive Paul Hamer
Hamer said that the firm still faced considerable challenges in the face of the current difficult market conditions but said that this restructure would give the firm a “solid platform” to move forward with implementing its future business strategy.
“Today 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.”
Under the restructuring package £52.9M of WYG’s debt will be converted into shares and handed to the banks - giving them a 60.5% controlling stake.
Ownership of the reminder of the firm will be split between a New Employee Benefit Trust, which will own 24.5%, and the existing shareholders who will together own 15%.
Hamer said that the new employee trust should enable some ownership of the firm to be put in the hands of every employee and expected the details of this new scheme to be rolled out shortly.
The banks have agreed to provide new lending facilities totalling £58.25M plus €38M of committed bonding facilities which Hamer said would “help put WYG on a strong and sustainable financial footing”.
The restructure was prompted by the consultant’s recent difficulty in servicing the huge banking debt of some £91.5M built up by a spending spree in the years since 2003, when it bought 18 smaller companies. Recent tough trading conditions have pushed the company close to breaking its banking covenants. The cost of the restructure plus other seasonal additional costs mena that the firm’s total debt had grown to £103M.
In October WYG posted an operating profit of £12M for the year, a figure overshadowed by a write-down of £141M in exceptional costs, making an overall loss of £123.7M. The company made a £22.2M profit in 2008.
Hamer insisted that shareholder approval for the restructure left the firm in good shape to tackle future challenges.
“With a new leadership team and a restructured balance sheet, we will be putting in place fundamental building blocks to enable us to benefit from profitable opportunities at home and internationally,” he said. “The approval by shareholders of our restructuring has endorsed a fresh start for WYG.”