WYG's banks agree to defer covenant test

Engineering consultant White Young Green has reached an agreement with its banks to defer a covenant test date to the end of July.

The company is trying to refinance an estimated £91m debt pile with Lloyds Banking Group, RBS and Belgian-Dutch bank Fortis over 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.

A company statement said: “The board expects that a further deferral of the covenant test date will be requested. A further announcement will be made in due course as appropriate.”

The margin on the banking facilities has been increased to 3% above LIBOR as a result of the deferral.

As part of a wider financial restructuring, the UK-based company also plans to raise an estimated £40m from investors.

It described trading as “mixed and challenging” but pointed to a number of recent contract wins including a €4.9m (£4.1m) deal to support the European Commission in delivering a three-year programme for regional development in Serbia.

It reiterated that it expected to incur “significant exceptional costs” in the year to 4 July 2009 relating to redundancy and office closure costs, goodwill impairment and the writedown of work in progress and accounts receivable balances.