Firm’s bid to rasie money for future
The remaining investors in WYG had a torrid time of it this week as it published the terms of its (latest) debt-for-equity swap, which saw them lose more than 85% of the value of their shares, alongside a separate effort to raise £30m and put the company on a sustainable financial footing for the future.
Accordingly the firm’s shares lost three quarters of their value between Thursday night and Friday morning, when the news was announced. And they’ve continued to fall since, with the 1.71p price on Monday giving the £150m-turnover firm a market value of just £1.3m. They’ve now lost 99.97% of their peak value.
The City doesn’t like debt-for-equity swaps because investors bear the brunt of whatever problems have forced the firm into that situation. This time the banks themselves got just convertible shares, meaning they also give up ownership (at least for the time being). However, after the credit crunch hit, many firms were forced into similar actions - most notably a number of the major housebuilders, to the point where it became relatively routine.
Chief executive Paul Hamer has been credited with a near-miraculous turnaround of the firm, securing the bank support that made the first debt-for-equity swap possible.
WYG’s most recent city update said it had lost £29m in nine months, on revenue of £122m. It still has a good name, and plenty of customers, but there’s no life’s looking bleak for its original shareholders.
9 January 2012
09 December 2011