Consultant White Young Green has confirmed that it will hold an extraordinary meeting in Leeds on 6 January 2010 to vote on proposals to restructure the company and delist from the London Stock Exchange to service debts and relist on the AIM exchange.
The restructuring will reduce the Group’s debt but shareholders must back the proposals. A statement from White Young Green warns:
“The Board believes that the Proposals, including the Restructuring, are in the best interests of Shareholders and that it is very important that Shareholders vote in favour of the Restructuring Resolutions at the EGM, to be held on 6 January 2010, so that the Restructuring can proceed. It is likely that failure to pass the Restructuring Resolutions would lead to the Company entering into administration or some other form of insolvency procedure.”
They go on to say that the new arrangements, which will see banks converting £52.9M of debt into shares which will be owned by the banks - a 60.5% stake.
Once complete, the company will be split:
- Lenders will own 60.5%
- The New Employee Benefit Trust will own 24.5%
- Existing Shareholders (including the existing stakes of Related Party Managers and Related Party Directors and certain Employees) will own 15.0%
This will have an impact on the group’s earnings:
- The increased margin payable under the terms of the Restructured Facilities Agreement compared to the terms of the Existing Facilities Agreement;
- The reduction in the total amount of the Group’s debt;
- Any changes in LIBOR (to the extent not hedged), which will affect the interest payable by the Company on the Refinanced Lending Facilities under the terms of the Restructured Facilities Agreement;
- The fees and commissions payable under the terms of the Restructured Facilities Agreement compared to the terms of the Existing Facilities Agreement;
- Any Preference Dividend paid; and
- The Redemption Premium payable, dependent on when the redemption of the Preference Shares occurs.
Finally, the statement reads: “The Board believes that, without the Restructuring proceeding, the Group would be unable to continue to operate within the Existing Lending Facilities and would be in default under the Existing Facilities Agreement.
“There already exist certain defaults under the Existing Facilities Agreement, in relation to which the Lenders have agreed to suspend any enforcement action (but not to waive the relevant breaches) until the earlier of (i) 5.00 p.m. on 8 January 2010; and (ii) the date (if any) on which the Lenders terminate their obligations to enter into the Restructuring, which they are entitled to do, inter alia, if Shareholders fail to pass all of the Restructuring Resolutions at the EGM.
“In addition, the Lenders have agreed to defer testing of the financial covenants until the same time.”
The shareholder meeting will take place at 2.00 p.m. on 6 January 2010 at the Village Hotel, 186 Otley Road, Headingley, Leeds LS16 5PR