Investors give 'overwhelming' backing to WYG's refinancing

Investors were forced to accept a significant dilution of their stakes by approving the plans, which hand WYG's banks a majority share. Shareholders had been warned their stakes would likely be worth nothing if they voted against the plans.

WYG, which also changed its name from White Young Green as a symbolic departure from its past, had become bloated with debt after a string of acquisitions. It was badly hit during the downturn and risked breaching banking covenants. In return for wiping out 50m of its 88.7m net debt, its banks Lloyds, Fortis and Royal Bank of Scotland, will take a 60.5 per cent stake in the company.

Shareholders will be left with 15 per cent and an employee share benefit trust will take the remaining 24.5 per cent.

"It's the beginning of a brand new chapter for WYG," said chief executive Paul Hamer. "This is a very good business, it just needs streamlining and pointing it in the right direction. We are very excited as a team.

"What we will see over the next three to five years is a business that has a different shape and a much tighter focus."

Under the terms of the refinancing, its banks will convert 20m of debt into new ordinary shares, and 30m into preference shares. Banks have also granted the company 58m of refinanced debt facilities under a three-year term, and WYG is also raising 38m euros (34m) on the bond market.

A vote on the restructuring won 95 per cent support from participating shareholders, which Mr Hamer said was "pretty overwhelming".

"Upon completion of the refinancing we will have significantly reduced the level of the group's debt, created a stable, long-term financial future for the company, secured around 2,700 jobs and provided renewed confidence to our clients," added Mr Hamer.

WYG will also lose its main market listing as it will no longer satisfy free float rules, and move down to the junior AIM market, where its shares will begin trading on February 4.

Finance director David Wilton said the group's new financial structure is "robust", setting it up for the challenges likely this year from a looming general election and a public sector spending squeeze. "We are now perhaps very good at dealing with challenges as we face them," he said.

Mr Hamer added the size of the employee benefit trust was intended to motivate and retain up to 140 key staff, as well as giving all employees a stake in rebuilding the group.

The restructuring also includes consolidating every 10 ordinary shares into one share.