WYG PLC (LON:WYG) has announced that its bank has now confirmed its agreement to waive the 31 March 2019 covenant tests and said constructive discussions in relation to the covenant structure attaching to the facilities continue.
The AIM-listed project management and consultancy group had warned on 13 February that it expected it would not meet either of the net debt to underlying earnings (EBITDA) or interest cover covenant tests within its bank facility agreements due on 31 March 2019.
READ: WYG lowers profit outlook as Brexit knocks business confidence
The company, which at the same time lowered its full-year profit forecast after a weak final quarter in 2018 as Brexit continued to make for a “cautious” business environment, said then it had opened discussions with the bank to secure a waiver of the relevant covenant tests.
WYG added that, notwithstanding the covenant waiver received from the bank and in light of the challenging final quarter, its board has made the proactive decision to focus on managing its balance sheet and, accordingly, to cancel payment of its interim dividend.
The company had declared on 4 December 2018 an interim dividend of 0.6p per ordinary share, which was due to be paid on 4 April, 2019.
Douglas McCormick, WYG’s chief executive officer commented: "As explained in our update in February, trading conditions have been unusually challenging in the final quarter of our current financial year and this waiver together with the cancellation of the dividend will provide us with the flexibility to manage the Company's balance sheet in the near term.”
He added: "Our recent discussions with the bank have been productive, giving us an opportunity to explain our confidence in, and outlook for, the business as well as outlining the proactive measures being taken by the Board to reduce our cost base."
In early afternoon trading, WYG shares held steady at 15.25p.