WYG seeks £30m-plus to avoid bank breach

The move follows an announcement by the company last week that it may breach its net debt to EBITDA (earnings before interest, tax, depreciation and amortisation) covenant.

It has debt of £91m against EBITDA of £32.1m, which is a ratio of 2.8, just under the maximum of 3.

Paul Hamer (pictured), WYG’s managing director, said: “It’s self-evident that the balance sheet needs restructuring. If you compare us to our peer group, we get less positive sentiment from the City.”

He declined to reveal how much WYG was trying to raise but Richard Rae, an analyst with RBS, suggested that the figure was likely to be between £30m and £40m.

He said the company’s current capital structure was not sustainable, adding: “A fund raising materially less than £30-40m would not conclusively address balance sheet concerns.”

The company is understood to be seeking the cash from both existing and new investors but one source close to the situation said Hamer had ruled out asking private equity groups for funds.

They said: “The rationale behind that decision is the inability by private equity companies to confidently raise debt against forward projections in what is a very volatile market.”

Hamer, who took over from Lawrie Haynes two months ago, also revealed the company was planning to open an office in Abu Dhabi by the end of March to boost its weak presence in the region.

He said: “Yes, we are coming late to the party but this isn’t a charge over the hill by us. It’s still a significant opportunity and we will only be pulled over there by key clients and relationships.”