WYG confirms placing to raise £32m

The Leeds-based group, which is majority owned by its banks, said the restructuring already has the backing of 85 per cent of its shareholders, making a vote a formality.

The issue of 64m new shares at a price of 50p each will raise £30m after expenses and is fully underwritten by investment bank Numis. Existing shareholders will be left with just 1.1 per cent of the group’s equity.

The group was forced to raise the cash after coming close to breaching its covenants and struggling to achieve profitability amid a deeply depressed UK construction sector. It warned earlier this month its debt and the costs of servicing it are unsustainable.

Under chief executive Paul Hamer WYG has cut £110m from its cost base, including halving its workforce, but has been operating in a “highly cash-constrained environment”.

The group, formerly called White Young Green, said the capital restructure will give its a net cash position. This provide it with firepower to grow and attract and retain staff, it said.

Non-executive chairman Mike McTighe said: “Much has been achieved over the past two years to recreate a stable operational platform.

“Today’s proposals will provide WYG with significant positive cash balances, a strengthened balance sheet and the ability to incentivise its employees, so creating a significantly stronger position from which to take advantage of the growth opportunities that now exist for the group.

“The board is grateful for the support of all of its stakeholders over the past two years, and in particular for the support of its lenders, which has enabled the group to reach this significant milestone in the group’s development.”

WYG restructured in 2009 in a deal which saw shareholders substantially diluted and its banks given a 60.5 per cent equity stake.

About £51m of the group’s net debt will be converted into 4.5m convertible shares. If these shares are converted into ordinary shares, WYG’s lenders would hold about five per cent of its equity.

Another £30m of preference shares held by its lenders and an employee benefit trust will be converted into deferred shares.

WYG will also consolidate every 50 existing ordinary into one new share.

Shareholders will vote on the deal on July 11.