WYG confirms debt-for-equity swap deal
WHITE Young Green (WYG), the Leeds-based design and engineering consultancy, today announced a debt-for-equity swap, which will see its banks take a majority stake in the business.
The deal will see WYG’s banks Lloyds, Royal Bank of Scotland and Fortis take a 60.5% stake in return for converting around £50m of the £91.5m debt owed to them into new ordinary shares and preference shares.
The balance of the monies owing to the banks will be refinanced by the banks into term debt facilities and working capital facilities including €38m of committed bonding facilities, each with a three-year term.
If approved existing shareholders will own 15% with a new employee benefit trust owning 24.5%.
It will also require WYG to leave the London Stock Exchange’s main market and migrate to the Alternative Investment Market (AIM) with a new name – WYG plc.
The group’s fortunes have also been lifted with the announcement of annual profits of £12m before £141m in exceptional costs and other items.
Paul Hamer, chief executive of WYG, said that the deal was a central piece of the jigsaw for creating a new future for the group.
“We have been trying to fix the balance sheet, which has dogged the company for some time,” he said.
“The deal means we can put WYG on a stable financial footing.”
He added: “We have been through profound change in the last 12 months, which has seen us look to restructure our finances, operations, processes and senior leadership team.
“All of this has being undertaken against the backdrop of a global recession and unpredictable conditions in the markets in which we operate.”
Mr Hamer admitted that it had taken some time for a deal to be reached but that the firm had always been looking for the “right solution not the fastest”.
The firm has been forced to extend its banking covenant tests several times while securing its future and has closed offices and cut around 800 jobs as it restructured.
Mr Hamer said that although the exceptional cost was high it was “legacy” and contained no nasty surprises. Around £77m of the £141m is goodwill not cash.
He added that the deal marked the beginning not the end of WYG and that the firm was cautiously optimistic over market conditions.
“The domestic market is still unpredicatable and volatile. However, we are seeing more signals that markets are coming back. Our international business is also successful,” Mr Hamer continued.
“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, while continuing to take a prudent and cautious view of the market.”
WYG employs around 3,000 staff, 500 of which are based in Leeds.