Consulting engineer White Young Green is preparing a share issue of about £40m to cut its £90m debt pile, according to sources close to the situation
The revelation follows the company’s announcement to the stock market this week that a refinancing deal with its lenders, currently under discussion, was “likely to result in a material dilution for existing holders of equity”.
The deal may also result in WYG de-listing from the main stock market under rules that stipulate that 25% of its shares must be freely tradeable rather than being held by institutional investors. It would either move to the alternative investment market or become a private company.
One source said: “There are still a lot of moving parts, but the bottom line is that the company needs to remove the debt from its balance sheet. The only question is who buys the shares. It will either be existing shareholders, new shareholders or the banks – or a combination of all or some of them.”
The company is trying to refinance an estimated £91m debt pile with Lloyds Banking Group, RBS and Belgian-Dutch bank Fortis amid fears that it will breach its covenant on net debt in relation to earnings before interest, tax, depreciation and amortisation.
The debt was racked up during a spending spree in which the company blew £85m buying 18 others in five years.
Paul Hamer, WYG’s chief executive, refused to discuss details of the deal, but said he wanted to get it done “as soon as practicable”.
He said: “We want the right solution, not the fastest one. We have had a very good dialogue with our lenders, but want to put this noise behind us and get on with running the business.”
The company’s share price fell 50% to 14p on Tuesday morning over fears of dilution.
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