WYG delays covenant test for fourth time

Engineering consultant White Young Green has bought itself yet more time to complete a rescue deal with its lenders.

In a statement to the City this morning, the company said its banks had agreed to defer a covenant test date for a fourth time on its £90m debt pile time as refinancing talks continue.

The waiver, which runs until 31 October and was expected as part of a monthly rolling agreement with its lenders, means the company will not breach lending terms as a result of its high debt, a move that could see its banks pull the plug.

In more positive news, the company said it was close to agreeing heads of terms on a new deal.

Paul Hamer, chief executive, said: “We are pleased to report that we have made significant progress in the discussions with our lenders. Heads of terms regarding a new financing structure are currently at an advanced stage, though the proposals are subject to some further negotiation and final agreement between the parties.”

The debt was racked up during a spending spree in which the company blew £85m buying 18 others in five years.

As part of the deal, WYG is understood to be preparing a share issue of about £40m to cut the debt.

The deal may also result in the company 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 close to the situation recently 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.”