Engineering consultant makes massive writedowns, but secures its future with debt-for-equity swap

White Young Green has announced a major financial restructuring deal that removes the threat hanging over its future.

Announcing the move alongside its full-year results this morning, chief executive Paul Hamer said the deal would see its lenders take control of 60% of the company under the terms of a share issue and debt-for-equity swap, while key employees would get 25% and existing shareholders 15%.

As a result of the three-year deal, the company’s debt will be cut in half from £100m to £50m.

Hamer said: “This has been about clearing out a historical legacy. This announcement is the first word in the new chapter and will see WYG recreated with a newer stronger identity that will drive value into the business.”

The company also announced plans to raise €38m (£34m) on the bond market to fund its overseas growth.

As part of the effort to begin a new chapter, Hamer also said the company plans to change its name from White Young Green to WYG. “We want to visibly demonstrate a move into the future,” he said.

Results for the year ended 30 June:

  • Turnover: Down 7% from £282m to £262m
  • Pre-tax profit before writedowns: £12.1m
  • Pre-tax loss after writedowns: £129m

More than £77m of the writedowns relate to goodwill on a string of acquisitions the company made before Hamer took over the top job from former boss Lawrie Haynes.

It spent £85m buying 18 companies in five years in what some observers thought were questionable markets like Ireland.

In relation to current trading, the company said: “There remains a lack of confidence and liquidity in many areas in which we trade, but there are also some encouraging signs in respect of opportunities and new contract wins.”

Hamer said he now wanted to move all parts of the business to the high end of the market. “If we’re not a top five player in anything we do we have to ask why we are doing it.”

In terms of international growth, he picked out central and eastern Europe, the Gulf, Africa and Turkey as key areas and, in the longer term, China.

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