Consultant engineer reveals that deal to refinance £91m debt pile could lead to share dilution and exit from main stock market
White Young Green has said that a share issue could form one plank of its refinancing deal.
In a statement to the stock exchange this morning, the engineering consultant said that any agreement with its lenders was “likely to result in a material dilution for existing holders of equity”.
It also said the deal could result in it leaving the main stock market, possibly dropping down to the AIM market for companies with smaller market capitalisations, but no further details were provided.
The company is trying to refinance an estimated £91m debt pile with Lloyds Banking Group, RBS and Belgian-Dutch bank Fortis amid fears it will breach its covenant on net debt to EBITDA (earnings before interest, tax, depreciation and amortisation).
The debt was racked up during a spending spree that saw the company blow £85m buying 18 companies in five years.
The statement said: “In the ongoing discussions with the group's lenders, the board, in conjunction with its advisers, has been working to identify ways to reduce significantly borrowings to levels that the board believes can be supported by current market conditions and ensure that the group has an appropriate and robust capital structure going forward.
“The work under way to establish the appropriate long term capital structure for the group is now based on considering options which are likely to result in a material dilution for existing holders of equity. Furthermore, the group may not, in such circumstances, continue to satisfy the conditions for listing on the main market.
“Discussions with the group's lenders are ongoing and a further announcement will be made in due course as appropriate.”