WYG looks at funding options in bid for growth

The Leeds-based group, which narrowly avoided administration in 2009 with a debt-for-equity swap, needs to sort out its finances before the end of June and hopes to raise enough cash to grow.

WYG recently started talks with its banks Lloyds, Royal Bank of Scotland and Fortis about securing new funds for growth.

Its lenders, which ended up with 60.5 per cent of the group in its restructuring, could sell down their stakes or opt to inject further funds into the business.

Other options could include de-listing WYG, or selling it to a bigger group. It is understood all options are open and no decision has yet been taken.

WYG, formerly known as White Young Green, employs about 1,700 staff and works on projects ranging from reducing sewer spills in Northern Ireland to improving infrastructure in Bosnia and Croatia.

However, plunging spending by public sector organisations in its domestic markets means the group has continued to struggle since its restructuring. Goodwill impairments and redundancy payouts helped drive it to £22m pre-tax losses in the six months to the end of 2010. Revenues dived 27 per cent to £83.7m.

The group agreed banking covenants at the time of its restructuring, which were due to tighten from June. Although the group is currently complying with its covenants, “uncertainties” mean “there will be a need to address covenants going forward”, the group said last month.

At the time of WYG’s interim results, finance director David Wilton said the range of financing options is “pretty wide”.

“What we need to do is articulate a plan going forward and present it to people who have cash,” he said. “They can choose to invest or not.” Mr Wilton added: “We need to look for the right sources. There are various options in terms of public and private fundraising to look at how we can get that money.

“We are looking at the options. We have not reached a decision about the right route to go down. We need to do it quickly.

“The lenders recognise the value of the business and we will have to see. The early signs are encouraging but we have got a long way to go.

“It’s a good opportunity and there are funds available for the right opportunity.”

Asked if this could involve a wealthy benefactor, Mr Wilton said it was a possibility. He added de-listing the company could also be an option.

“The plan is to access the capital for developing the strategy,” he said. “That may or may not involve us being a listed company. What we are after is funding, not (necessarily) the listing.”

WYG recently sold its engineering subsidiary Adams Kara Taylor for £3.75m to a management team, but this will only pay off a fraction of the group’s debt, which was £33.9m at the end of the year.

WYG wants the funds to invest in its first acquisitions for three years. It aims to create “a positive growth environment” by growing abroad.

Chief executive Paul Hamer said in a statement yesterday: “We have entered into a collaborative process with our lenders to explore the options available to address the longer term funding requirements of the group.

“We are keen that we have access to sufficient capital to take advantage of the opportunities that now exist to grow in our chosen markets and to attract and retain talented employees. We are at the very early stages of this process and we plan to finalise it before June 30.”

How it all began

THE WYG story started in 1959 when Ernest Green set up an engineering consultancy. White Young formed in Leeds in 1964 as a partnership between Ron Young and Terence White.

White Young and Partners operated until 1978 when it was sold to Central and Sherwood and began trading as White Young Consulting Engineers.

In 1997, White Young Consulting Group and Ernest Green Holdings merged to form a new plc, White Young Green, through a reverse tak-eover. The recession forced it to restructure in 2008, and in 2010 it rebranded WYG.