Heywood Williams will offer lenders the lion’s share its equity in exchange for £21m of bank debt as part of a capital restructuring plan, the building products maker said on Thursday.
The proposed restructuring, which comes after a year in which Heywood has seen its shares fall by more than 50 per cent and has been forced to cut its workforce by about 35 per cent, would also mean the group de-listing from the London Stock Exchange.
“We want to do something once and we want to do it comprehensively, and this is focused at securing the long term future of the business,” said Robert Barr, chief executive.
The company, which sells branded products to the home improvement and housebuilding markets in Europe and North America, said the UK banking syndicate would, after the restructuring, hold 80 per cent of the diluted shares.
The remaining 20 per cent would be divided equally between existing shareholders and Heywood’s board and executive members.
Mr Barr was sceptical about the possibility of a quick recovery in the building products sector, instead predicting a slow and modest trajectory back to 2007 levels.
“For a few months we have seen fragile stability, but that’s not exactly green shoots and realistically we are looking at a ‘U’ shaped recovery,” he said.
Heywood warned that failure to pass the restructuring resolution would be likely to “lead the group to enter into administration or some other form of insolvency procedure”.
The restructuring would also involve a £6m increase of the group’s banking facilities to £45m.
Shares in the Heywood, which would be unlikely to retain any real value if shareholders rejected the proposal, were unchanged at 3.02p on Thursday.