WYG Regulatory News (WYG)

THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED THEREIN IT IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, IN OR INTO THE UNITED STATES, AUSTRALIA, CANADA, JAPAN, SOUTH AFRICA AND THE REPUBLIC OF IRELAND AND SHOULD NOT BE DISTRIBUTED IN, FORWARDED TO OR TRANSMITTED INTO ANY JURISDICTION WHERE TO DO SO MIGHT CONSTITUTE A VIOLATION OF APPLICABLE SECURITIES LAWS OR REGULATIONS.

THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED THEREIN HAS NOT BEEN APPROVED BY THE UNITED KINGDOM LISTING AUTHORITY OR BY THE LONDON STOCK EXCHANGE. INVESTORS WHO ARE CONSIDERING ACQUIRING ORDINARY SHARES ARE REMINDED THAT ANY SUCH PURCHASE MUST BE MADE ONLY ON THE BASIS OF THE INFORMATION RELATING TO THE COMPANY CONTAINED IN THE FULL CIRCULAR IN ITS FINAL FORM.

For immediate release 24 June 2011

WYG plc

Placing, Share Reorganisation, Share Consolidation and Notice of General Meeting

As outlined in the Company's preliminary results announcement on 16 June 2011, the Company announces today a capital restructuring including the following Proposals which are conditional, inter alia, on shareholder approval:

·; the Placing, fully underwritten by Numis, of in aggregate 64,000,000 New Ordinary Shares at a price of 50 pence per New Ordinary Share with new institutional investors (equivalent to one pence per Ordinary Share on a pre Share Consolidation basis), raising gross proceeds of approximately £32 million (approximately £30 million net of expenses);

·; the conversion of approximately £51 million of the Group's net debt (excluding certain restricted cash balances) into 4,540,758 Convertible Shares;

·; the redesignation of all of the Preference Shares held by the Lenders and the Employee Benefit Trust with an aggregate nominal value of £30 million into 'C' Deferred Shares;

·; the provision by the Lenders of revised bonding facilities in relation to those bonds in issue at Completion of the Placing which are required as part of the Group's ongoing operations;

·; a Share Reorganisation such that each Existing Ordinary Share of 10 pence each in the capital of the Company will be sub-divided into one ordinary share of 0.002 pence each and one 'B' Deferred Share of 9.998 pence each in the capital of the Company; and

·; a Share Consolidation to be undertaken on the basis of one Post-Consolidation Ordinary Share for every 50 Existing Ordinary Shares.

·; In addition, in recognition of the importance of attracting and retaining talented employees, the Board proposes to establish an effective and meaningful employee incentivisation structure, including a new share based incentive arrangement.

The entry into the Debt Conversion Agreement and the Framework Agreement and the issue of the Convertible Shares and the grant of the various share awards to the Executive Directors and the Chairman constitute "related party transactions" as defined under the AIM Rules and further details are set out within this announcement.

The Company has received irrevocable undertakings to vote in favour of the Resolutions to be proposed at the General Meeting from certain Shareholders holding, in aggregate, 30,007,991 Existing Ordinary Shares representing approximately 85.0 per cent. of the Existing Issued Ordinary Share Capital.

The Board considers that the Proposals, if completed, will provide the Group with significant positive cash balances and a strengthened balance sheet, creating a viable, sustainable capital structure enabling it to win new business and to recruit, retain and incentivise employees with appropriate performance-based rewards.

The Board, therefore, considers the Restructuring and the Placing to be in the best interests of the Company and its Shareholders as a whole and the Independent Directors recommend that the Shareholders vote in favour of the Resolutions as the Directors (who are Shareholders) intend to do in respect of their own beneficial holdings, which amount in aggregate to 15,050 Existing Ordinary Shares representing approximately 0.04 per cent. of the Existing Issued Ordinary Share Capital.

A copy of the Circular containing the notice of General Meeting will be sent to Shareholders later today and a copy will also be made available on the Company's website: www.wyg.com

Mike McTighe, Non-Executive Chairman, commented:

"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."

For further information, please contact:

WYG plc

Paul Hamer, Chief Executive Officer

David Wilton, Group Finance Director Tel: 0113 278 7111

Numis Securities Limited (Joint Financial Adviser and Broker)

Stuart Skinner / Jamie Lillywhite Tel: 0207 260 1000

Deloitte (Joint Financial Adviser)

Anup Shah / James Lewis Tel: 020 7936 3000

Arbuthnot Securities (Nomad and Broker)

Nick Tulloch/Rebecca Gordon Tel: 0207 012 2100

MHP Communications

John Olsen/Katie Hunt Tel: 0203 128 8100

No undertaking, representation, warranty or other assurance, express or implied, is made or given by or on behalf of the Company or Arbuthnot Securities Limited ("Arbuthnot Securities") or Numis Securities Limited ("Numis") or Deloitte Corporate Finance, any of their respective directors, officers, partners, employees, agents or advisers or any other person as to the accuracy or completeness of the information or opinions contained in this announcement and no responsibility or liability is accepted by any of them for any such information or opinions or for any errors, omissions or misstatements, negligence or otherwise for any other communication written or otherwise. Nothing in this paragraph shall exclude liability for any undertaking, representation, warranty or other assurance made fraudulently.

Arbuthnot Securities, which is regulated by the Financial Services Authority, is acting as the Company's Nominated Adviser. Its responsibilities as the Company's Nominated Adviser under the AIM Rules for Companies and the AIM Rules for Nominated Advisers will be owed solely to the London Stock Exchange and not to the Company, to any of its directors or to any other person in respect of a decision to subscribe for or acquire Ordinary Shares. Arbuthnot Securities will not be responsible to anyone other than the Company for providing the protections afforded to customers of Arbuthnot Securities, nor for providing advice in relation to the Placing and Admission.

Numis, which is regulated by the Financial Services Authority, is acting as the Company's broker in relation to the Placing and Admission. In relation to the Placing and Admission, Numis is advising the Company and no one else (whether or not a recipient of this announcement), and will not be responsible to anyone other than the Company for providing the protections afforded to customers of Numis, nor for providing advice in relation to the Placing and Admission.

Deloitte Corporate Finance is acting exclusively for the Company and for no-one else in connection with the Proposals and will not regard any other person as its client nor be responsible to anyone other than the Company for providing the protections afforded to clients of Deloitte Corporate Finance nor for providing advice in connection with the Proposals or any other matter referred to in this announcement. Deloitte Corporate Finance is a division of Deloitte LLP, which is authorised and regulated by the Financial Services Authority in respect of regulated activities.

This announcement includes "forward-looking statements" which include all statements other than statements of historical facts, including, without limitation, those regarding the Company's financial position, business strategy, plans and objectives of management for future operations, or any statements preceded by, followed by or that include the words "targets", "believes", "expects", "aims", "intends", "will", "may", "anticipates", "would", "could" or similar expressions or negatives thereof. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors beyond the Company's control that could cause the actual results, performance or achievements of the Company to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. Such forward-looking statements are based on numerous assumptions regarding the Company's present and future business strategies and the environment in which the Company will operate in the future. These forward-looking statements speak only as at the date of this document. The Company expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statements contained herein to reflect any change in the Company's expectations with regard thereto or any change in events, conditions or circumstances on which any such statements are based unless required to do so by applicable law or the AIM Rules.

Introduction

The Company today announces a capital restructuring including a Placing, Share Reorganisation, Share Consolidation and Notice of General Meeting, as outlined in the following excerpts from the Circular which is to be posted to shareholders today.

On 16 June 2011, the Company announced that it anticipated undertaking a capital restructuring which would include an equity fundraising to raise £30 million (net of expenses) along with the conversion of the Group's net debt into Convertible Shares and the redesignation of the Company's Preference Shares into 'C' Deferred Shares. Further to this announcement, the Company announces today that, conditional upon, inter alia, Shareholder consent, it has placed in aggregate 64,000,000 New Ordinary Shares at a price of 50 pence per New Ordinary Share with new institutional investors.

As a condition of the Placing, the Company is undertaking a Share Consolidation, further details of which are described below. The Placing Price is equivalent to one pence per Ordinary Share on a pre Share Consolidation basis (being a discount of approximately 88 per cent. to the closing mid-market price of 8.5 pence per Existing Ordinary Share as at 23 June 2011, the last Trading Day prior to the date of this announcement).

In addition, it has agreed with the Lenders that, conditional upon Completion , the Group's net debt of approximately £51 million, being calculated as the projected net debt (excluding certain restricted cash balances) as at 12 July 2011 as adjusted in respect of professional fees and hedge settlement expenses, will be converted into 4,540,758 Convertible Shares, the Preference Shares will be redesignated as 'C' Deferred Shares having no economic rights and revised bonding facilities in relation to those bonds in issue at Completion of the Placing which are required as part of the Group's ongoing operations will be provided. The £51 million projected net debt at 12 July 2011, which is subject to the conversion, includes £3.4 million of professional fees and hedge settlement expenses and is further increased by the exclusion of restricted cash of £6.2 million. The underlying net debt figure is therefore approximately £12.3 million higher than the net debt at 31 March 2011, approximately £6.9 million of which relates to amounts received in advance of the period end at 31 March 2011.

As set out in the Preliminary Results Announcement, the Board considers that the current capital structure of the Group and the costs of servicing its debt are unsustainable and accordingly, a capital restructuring is required. The Board has considered a full range of alternatives that would deliver the most value for stakeholders, revise the Company's current capital structure and alleviate some of the covenants and controls that are currently in place to allow the strengthened operational business to move forward and believes that the Proposals are in the best interests of the Company and its Shareholders as a whole.

The Board believes that the Proposals, if completed, will provide the Group with significant positive cash balances and a strengthened balance sheet, creating a viable, sustainable capital structure enabling it to win new business and to recruit, retain and incentivise employees with appropriate performance-based rewards.

This announcement should be read in conjunction with the Circular, which outlines in full why the Company is seeking to complete the Proposals and provides Shareholders with information to enable them to exercise their vote on the Resolutions at the forthcoming General Meeting.

Background to and reasons for the Proposals

Over the last three years, WYG has experienced extremely challenging trading conditions in most of its areas of operation, particularly within the UK and the Republic of Ireland. The effect of these market-wide headwinds on the profitability and cash flow of the Group has been materially worsened by the ongoing requirement to service the substantial debt burden that the Group accumulated as a result of the 38 acquisitions which it made between 1997 and 2007.

On 9 December 2009, the Board announced the 2009 Restructuring to reduce the level of the Group's debt in an attempt to create a strengthened and more appropriate capital structure for the Group. The 2009 Restructuring secured the immediate survival of WYG as it was likely that without this restructuring, the Company would have entered administration or some other form of insolvency procedure. The 2009 Restructuring reduced the Group's net debt by approximately £52.9 million through the conversion of £22.9 million of debt held by the Lenders in exchange for 29,993,441 Ordinary Shares and the conversion of an additional £30 million of debt held by the Lenders in return for 27,600,000 'A' Preference Shares with an aggregate nominal value of £27.6 million and 2,400,000 'B' Preference Shares with an aggregate nominal value of £2.4 million.

Following the 2009 Restructuring, the Lenders now own approximately 60.5 per cent. of the Existing Issued Ordinary Share Capital and all of the 27.6 million 'A' Preference Shares, in addition to providing to the Group further debt facilities and supplying performance bonds. The Group's Employee Benefit Trust owns a further 24.5 per cent. of the Existing Issued Ordinary Share Capital and the 2.4 million 'B' Preference Shares with the remainder of the Existing Ordinary Shares being in public hands.

Since the 2009 Restructuring, substantial progress has been made in the operational turnaround of WYG as demonstrated by the creditable operational performance in the nine month period ended 31 March 2011. The Board considers that the Group's continued deployment of its three-part strategy which was launched early in 2009, concentrating on creating a more focused and efficient business, developing the Group's international focus and creating 'peaks of excellence' across critical and sustainable sectors, leaves it well positioned for growth, if the onerous debt burden can be alleviated.

Against a backdrop of unprecedented cuts in public sector spending, the Board has focused on the development of operations outside the UK and Ireland, where the Group's markets remained more resilient. The Group has been reorganised into four key market segments, creating a more efficient global business that is better positioned to exploit significant international opportunities. Emphasis has now moved to utilising a collaborative approach with its selected partners to optimise global opportunities whilst concentrating on delivering technical excellence. This has facilitated a number of significant new international business wins in the Group's traditional donor funded markets, as well as in areas of technical services where, prior to restructuring the business, the Group's offering was limited to the UK and Ireland.

In spite of these successes, trading conditions remain challenging, especially in the Group's UK and Irish businesses, and, although revenues are now stabilising, visibility of future workflow in both the public and private sectors remains limited. Furthermore, whilst the operational restructuring of the Group is substantially complete, the Group continues to be affected by various pre-2009 legacy issues including significant onerous lease commitments and the payment of settlements in respect of professional indemnity claims. The Group also remains cash constrained by the requirement to fund the repayment of its borrowings and interest payments thereon.

These factors have resulted in the Board facing considerable difficulty in delivering the investment in staff and offices required to drive the future development of the Group. In particular, the Group's financial position has made it challenging to motivate, retain and recruit the highly skilled personnel who form the core assets of any consultancy business. In this context, the Board has, together with its advisers, again carried out a fundamental review of the Group's overall debt and capital structure.

Although the 2009 Restructuring reduced the Group's net debt by approximately £52.9 million, it remained at £29.2 million at 31 March 2011, with a £58 million debt facility committed until December 2012. In addition, the Lenders have supplied performance bonds of €29 million as at today's date. The Board considers this level of net debt to be unsustainable. Furthermore, the debt facilities contain various covenants and obligations which require the Company to seek the Lenders' consent.

As at today's date the Group remains compliant with its existing covenants. However, as stated in the Preliminary Results Announcement, the current covenant structure will tighten from 30 June 2011 and given the major operational restructuring programme implemented across the Group, the continuing pressure on its domestic markets and the sale of the business of Adams Kara Taylor, the Board expects that the Group would not comply with these covenants were they to be tested on the due reporting date of 14 August 2011.

The Board has carried out a collaborative process of negotiations with the Lenders to explore the options available to address the short and longer term funding requirements of the Group. These requirements include the bonding facilities which have been, and continue to be, important to the Group's ongoing operations, particularly in the international donor funded business. Conditional upon Completion the Lenders have agreed to continue to make available, on the terms set out in the Amended and Restated Facilities Agreement, the bonds currently drawn on the existing bonding facilities until 31 December 2014 or their redemption if earlier. The Company is now seeking new bonding facilities on the assumption that the Proposals are implemented and the Board is confident that suitable bonding facilities will be obtained on acceptable terms.

Since 2009, the Company has placed great emphasis on the effective management of working capital and has consistently performed strongly in cash generation relative to expectations. Indeed, cash generation was sufficiently strong to trigger a cash sweep to the Lenders in June 2010 (when the cash balances held in certain international, project and other accounts exceeded the limits budgeted at the time of the 2009 Restructuring). The Company expects to continue to generate cash from working capital during the current financial year but such generation is likely to be outweighed by the cash costs incurred in respect of vacant properties, interest, capital expenditure, exceptional costs, professional indemnity settlements and other costs. Many of these cash costs are in respect of legacy issues that are being actively addressed and will reduce over time. Cash management will continue to be a priority for the Group.

The Board also recognises that the Group must have access to sufficient capital to take advantage of the opportunities that now exist to grow in the Group's chosen markets and to attract and retain talented employees. The Company, its advisers and the Lenders considered a full range of alternatives that would address the Group's capital structure and place it on a footing which would allow the strengthened operational business to grow. These included obtaining capital from a variety of sources and a possible sale of parts or all of the business.

The Proposals will involve a very significant dilution of Existing Shareholders' equity interest in the Company, with Existing Shareholders holding only 1.09 per cent. of the Enlarged Issued Ordinary Share Capital. However, the Board believes that the Proposals will safeguard the future of the Group and provide the potential to deliver some value to Existing Shareholders.

The Proposals include a Placing to raise gross proceeds of approximately £32 million (approximately £30 million net of expenses), the conversion of approximately £51 million of the Group's net debt (excluding certain restricted cash balances) into 4,540,758 Convertible Shares, the redesignation of all of the 'A' Preference Shares held by the Lenders with an aggregate nominal value of £27.6 million and the 'B' Preference Shares held by the Employee Benefit Trust with an aggregate nominal value of £2.4 million into 'C' Deferred Shares with no economic value attached to such shares (as more particularly described below) and the provision by the Lenders of revised bonding facilities in relation to those bonds in issue at Completion which are required as part of the Group's ongoing operations. Following Completion, the Company will not be subject to any long term debt obligations other than the revised bonding facility.

The Board considers that the Group's revised capital structure following the Proposals will provide a platform to secure the Group's future and enable the Group to grow in its chosen markets.

In addition, as mentioned above, the Board recognises the importance of attracting and retaining talented employees and accordingly, has established an effective employee incentivisation structure, further details of which are set out below.

The Board considers that the Proposals will, if completed, provide the Group with significant positive cash balances and a strengthened balance sheet, creating a viable, sustainable capital structure and a positive growth environment enabling it to win new business and to recruit, retain and incentivise employees with appropriate performance-based rewards.

In the event that the Resolutions are not passed at the General Meeting and the Proposals are not implemented, then going forward the Group is likely to be unable to satisfy its existing financial covenants and/or service its existing borrowings. In such an event, the Group would be in default under the Existing Facilities Agreement. Such a default under the Existing Facilities Agreement would entitle the Lenders to demand repayment of all outstanding amounts and to cancel the facilities. Although the Board has worked with the Lenders to develop alternative options in the event that the Resolutions are not passed, there is no certainty that any such options could be implemented. The Group could then face administration or other insolvency proceedings as the Board believes that alternative sources of debt or equity finance are unlikely to be available, or that such alternative sources, to the extent they are available, would be likely to involve the insolvency of all or part of the Group. Both such outcomes would, in the Board's opinion, result in Shareholders receiving no value for their current shareholdings.

Details of the Restructuring

It is proposed that approximately £51 million of net debt, being calculated as the projected net debt (excluding certain restricted cash balances) as at 12 July 2011 as adjusted in respect of certain professional fees and the termination of the interest rate swaps, held by the Lenders will be converted into 4,540,758 Convertible Shares, which, subject to certain conditions, will have rights of conversion into Ordinary Shares. The Convertible Shares will have no voting, economic or other rights save in certain circumstances, which are summarised below and will not be entitled to participate in a return of capital or assets.

In addition, the Preference Shares will be re-designated as a new class of 'C' Deferred Shares having the same rights and restrictions as the Deferred Shares, and, therefore, no economic value will attach to the 'C' Deferred Shares. The 'C' Deferred Shares will carry no entitlement to dividends, no redemption premium on a sale or winding up and no voting rights.

No share certificates will be issued in respect of the 'C' Deferred Shares, nor will CREST accounts of Shareholders be credited in respect of any entitlement to 'C' Deferred Shares' nor will they be listed on AIM or any other investment exchange.

An amendment and restatement agreement (the "Amended and Restated Facilities Agreement") was entered into on 24 June 2011 between the Company and certain of its subsidiaries, Lloyds in various capacities, Fortis, BNP Paribas Bank Polska and RBS, pursuant to which the parties agree to amend and restate the Existing Facilities Agreement, including making the following amendments:

1. extending the termination date of the bonding facilities made available by Lloyds, BNP Paribas Bank Polska and Fortis to 31 December 2014;

2. removing all financial covenants and references to the term facilities and revolving facilities;

3. increasing permissions under the undertakings to allow the Company and its subsidiaries, amongst other things to:

3.1 make disposals without the consent of the Lenders provided that the proceeds are used to collateralise the bonds (provided that such collateral will be released back to the Company according to a formula as the outstanding bonds are redeemed);

3.2 make acquisitions and investments in joint ventures subject in certain circumstances to the provision of financial projections, providing there is no event of default continuing or that would occur immediately after such transaction and, for transactions over certain levels, there must be equity funding;

3.3 make dividends of up to 50 per cent. of post tax income of the Group, subject to no event of default continuing.

The share capital of the Company will also be restructured, as summarised below.

Completion of the Restructuring will take place and the Debt Conversion will become effective in accordance with the terms of the Framework Agreement entered into on 24 June 2011 between, inter alia, the Company, the Lenders and Numis SecurIties Limited (the "Framework Agreement").

Details of the Placing

The Board proposes to raise approximately £30 million (net of expenses) by the issue of 64,000,000 New Ordinary Shares to new institutional investors at an issue price of 50 pence per New Ordinary Share. As a condition of the Placing, the Company is undertaking a Share Consolidation, further details of which are described below. The Placing Price is equivalent to one pence per Ordinary Share on a pre Share Consolidation basis (being a discount of approximately 88 per cent. to the closing mid-market price of 8.5 pence per Existing Ordinary Share as at 23 June 2011, the last Trading Day prior to the date of this announcement).

In structuring the Placing, the Directors have had regard, inter alia, to the current financial and trading position of the Group, the willingness of the Existing Shareholders to provide further equity fundraising and the need for certainty within a limited time frame. After considering these and other factors, the Directors have concluded that the Placing is the most suitable option available to the Company and all its stakeholders.

The Directors have set the Placing Price following meetings with the new investors subscribing in the Placing and after exploring multiple other sources of fundraising together with other strategic methods of realising value for Shareholders.

The Placing is fully underwritten by Numis subject to and on the terms set out in the Placing Agreement entered into by the Company, Numis and Arbuthnot Securities on 24 June2011. The Placing is conditional, inter alia, on Shareholder approval of the Resolutions, which will be sought at the General Meeting.

The Placing Agreement is terminable by Numis in certain circumstances, including any of the warranties given by the Company therein not being true and accurate in all material respects and not misleading at the date of the agreement and immediately prior to Admission, a failure of the Company to comply with its obligations under the Placing Agreement which is adverse in the context of the Placing, a Material Adverse Change (as such expression is defined in the Placing Agreement) having occurred on the occurrence of certain force majeure events and if either the Framework Agreement or the Debt Conversion Agreement are terminated in accordance with their terms.

Shareholders should note that the Company has received irrevocable undertakings to vote in favour of the Resolutions to be proposed at the General Meeting from certain Shareholders holding, in aggregate, 30,007,991 Existing Ordinary Shares representing approximately 85.0 per cent. of the Existing Issued Ordinary Share Capital.

Upon Admission, the New Ordinary Shares will in aggregate represent approximately 98.91 per cent. of the Enlarged Issued Ordinary Share Capital. Existing Shareholders (including the Lenders and certain Directors, managers and employees of the Company) will own approximately 1.09 per cent. Of the Enlarged Issued Ordinary Share Capital.

Application will be made to the London Stock Exchange for the New Ordinary Shares to be admitted to trading on AIM. It is expected that Admission will become effective on 12 July 2011 and that dealings in the New Ordinary Shares will commence at 8.00 a.m. on 12 July 2011.

Application has been made for the New Ordinary Shares to be eligible for admission to CREST with effect from Admission. Accordingly, settlement of transactions may take place through CREST if the relevant Shareholder so wishes.

The New Ordinary Shares, when issued and fully paid, will be identical to, and rank in full with, the Post-Consolidation Ordinary Shares for all dividends or other distributions declared, made or paid after Admission and will rank pari passu in all respects with the Post-Consolidation Ordinary Shares as at the date of issue.

Mike McTighe, David Jeffcoat and Robert Barr, being Directors of the Company, are participating in the Placing to the amounts of £100,000, £17,000 and £10,000 respectively.

Use of Proceeds

The Company intends to use the proceeds of the Placing to fund the Group's ongoing working capital requirements and, where necessary and appropriate, to cash collaterise new and/or existing bonds and to replace or reduce its reliance on new and/or existing bonds. Whilst the operational restructuring of the Group is substantially complete, the working capital requirement will include significant ongoing cash costs in respect of legacy issues including the payment of rent, rates and service charges on vacated office premises and the payment of settlements in respect of professional indemnity claims. The Company intends to maintain its rigorous focus on effective working capital management and believes that the Group should benefit from having a stronger balance sheet with significant net cash rather than operating in a highly cash constrained environment as has been the case for the past two years.

Convertible Shares

As part of the Restructuring, the Company has agreed with the Lenders to issue to them 4,540,758 Convertible Shares. Subject to certain conditions, as summarised in the Appendix of the Circular, these Convertible Shares will have rights of conversion into Ordinary Shares. If all of the Convertible Shares were to be converted at the agreed conversion ratio, the resulting interest in Ordinary Shares held by the Lenders would be 4,540,758 Ordinary Shares, which would equate to five per cent. of the Enlarged Issued Ordinary Share Capital as at Admission and following implementation in full of the new management incentive arrangements (as described below) and the conversion of all the Convertible Shares.

The Convertible Shares will not be listed on AIM or any other investment exchange. The rights attaching to the Convertible Shares shall be contained in the New Articles which are summarised in the Appendix to the Circular.

A holder of any Convertible Shares shall be entitled to convert the Convertible Shares into Ordinary Shares at any time provided that:

(i) the Company's volume weighted average Ordinary Share price rises above three times the Placing Price for a period of at least 25 consecutive Trading Days between the second and tenth anniversary following Admission; or

(ii) an offer is made to acquire the entire issued share capital of the Company which becomes unconditional in all respects (or, if conducted by way of a scheme of arrangements, such scheme of arrangement becomes effective); or

(iii) the Ordinary Shares cease to be listed either on AIM or the main market of the London Stock Exchange.

The Company shall not be permitted to declare a dividend in excess of 50 per cent. of the Group's annual post tax income in respect of any accounting period ("Annual Dividend Limit") except with the consent in writing of the holders of 50 per cent or more of the nominal value of the Convertible Shares then in issue, or with the sanction of a resolution passed by the holders of Convertible Shares representing at least 50 per cent of the nominal value of the Convertible Shares then in issue at a separate meeting of the holders of the issued shares of that class validly held in accordance with the provisions of the New Articles.

Subject to 50 per cent. of the post tax income of the Group in aggregate having already been received by way of dividend or other distribution by Shareholders in respect of a particular accounting reference period, the holders of Convertible Shares shall have the right to receive their pro rata share of any further interim or final dividend in excess of an amount equal to the relevant Annual Dividend Limit pari passu with the holders of Ordinary Shares as if the Convertible Shares had been converted into fully paid Ordinary Shares at the relevant conversion ratio. This shall be subject always to the holders of Ordinary Shares having received an amount equal to the Annual Dividend Limit.

The holders of Convertible Shares will be entitled to attend but will not be entitled to vote at a general meeting of the Company, save in respect of any resolution directly or indirectly modifying or varying any of the special rights, privileges or restrictions attached to the Convertible Shares, when they shall be entitled to vote as if such Convertible Shares had converted into Ordinary Shares.

The consent in writing of the holders of 50 per cent. or more of the nominal value of the Convertible Shares then in issue, or the sanction of a resolution passed by the holders of Convertible Shares representing at least 50 per cent. of the nominal value of the Convertible Shares then in issue at a separate meeting of the holders of the issued shares of that class validly held in accordance with the provisions of the New Articles will be required for certain matters specified in the New Articles and the variation or abrogation of the rights attaching to the Convertible Shares. Other than as set out above, the Convertible Shares will have no voting, economic or other rights and will not be entitled to participate in a return of capital or assets.

Share Reorganisation

The Company proposes to undertake a share reorganisation such that each Existing Ordinary Share of 10 pence each in the capital of the Company will be sub-divided into one ordinary share of 0.002 pence each and one 'B' Deferred Share of 9.998 pence each in the capital of the Company.

The Share Reorganisation is conditional upon the approval of the Shareholders at the General Meeting as required by the Act and the Articles. Due to the interconditionality of the Resolutions proposed at the General Meeting, all such Resolutions will need to be passed in order for the Share Reorganisation to take effect.

The 'B' Deferred Shares, to be created upon the passing of the Resolutions, will have no voting rights or dividend rights and on a return of capital, shall have the right to receive an amount equal to the sum of the nominal value of such shares.

No share certificates will be issued in respect of the 'B' Deferred Shares, nor will CREST accounts of Shareholders be credited in respect of any entitlement to 'B' Deferred Shares, nor will they be listed on AIM or any other investment exchange.

Share Consolidation

Under the Proposals, it is intended that the Company shall undertake a share consolidation such that the Existing Ordinary Shares (following the Share Reorganisation referred to above) are consolidated into ordinary shares of 0.1 pence each in the capital of the Company. The effect of the Share Consolidation will be to reduce the total number of Ordinary Shares in issue prior to Admission.

The Share Consolidation will be undertaken on the basis of one Post-Consolidation Ordinary Share for every 50 Existing Ordinary Shares. Following the Share Consolidation and prior to the issue of the New Ordinary Shares, the Company's issued ordinary share capital will comprise 705,798 ordinary shares of 0.1 pence each in the capital of the Company.

Fractional entitlements to Post-Consolidation Ordinary Shares will be rounded down to the nearest whole number. All such fractional entitlements will be aggregated and all Post-Consolidation Ordinary Shares arising from such aggregation will be sold. It is expected that the net proceeds of such sale will be retained for the benefit of the Company. Such sale is in accordance with both the existing Articles the Intermediate Articles and also the New Articles, which state that, whenever fractions arise as the result of any consolidation of shares the Directors may deal with such fractions as they see fit and, in particular, may sell the shares to any person and distribute to and amongst the Shareholders in due proportions the net proceeds of such sale.

Following completion of the Share Consolidation, new share certificates will be issued to those existing shareholders who hold their shares in certificated form.

The Share Consolidation is conditional upon the approval of the Shareholders at the General Meeting as required by the Act and the Articles. Due to the interconditionality of the Resolutions proposed at the General Meeting, all such Resolutions will need to be passed in order for the Share Consolidation to take effect.

It is envisaged that at some stage in the near future following Completion, the Company will undertake a capital reduction by means of either a cancellation of the Company's share premium account or a reduction of the nominal value of the Post-Consolidation Ordinary Shares and the New Ordinary Shares in order to create distributable reserves. This will be a court approved procedure which will also require Shareholder consent and the Board intends that necessary resolutions will be proposed at the Company's next annual general meeting expected to be held in September 2011.

To reflect the change in capital structure following completion of the Share Reorganisation and the Share Consolidation, but pending Completion, upon which the allotment of the Convertible Shares to the Lenders and the re-designation of the Preference Shares into 'C' Deferred Shares will take effect and the New Articles will be adopted, it is necessary for the Company to adopt the Intermediate Articles which will reflect such capital structure changes. Subject to their adoption at the General Meeting, the Intermediate Articles will take effect from conclusion of the General Meeting until Completion, when they will be superseded by the New Articles.

The Company also intends to use part of the proceeds of the Placing to effect a buy back of the Deferred Shares and the 'B' Deferred Shares and the 'C' Deferred Shares to be allotted as part of the Restructuring pursuant to the provisions of the New Articles following their adoption, for a nominal amount. This will be subject to the Company obtaining the necessary authority of its Shareholders, and the Company proposes to table the required resolution at its next annual general meeting, expected to be held in September 2011.

New Management Incentive Arrangements

As mentioned above, the ability to attract and retain talented employees remains a key strategic focus of the Company. The Company is a "people business" and therefore needs to have in place appropriate and effective incentive plans for its staff.

The WYG Joint Ownership Share Plan 2009 and the WYG Performance Share Plan 2009 were put in place in early 2010 following the 2009 Restructuring (the "2010 Share Awards"). Following feedback from across the business, it has been acknowledged that these 2010 Share Awards have not been perceived as effective by the Group's employees.

In particular, the Company's share price did not adjust as expected to reflect the dilution of existing shareholdings by the Ordinary Shares acquired by the Lenders in the 2009 Restructuring.

With this background, the Board is proposing revised incentive arrangements as follows:-

·; The Board believes that its existing bonus programme is the most straightforward and direct way to reward individual and team achievement for identified professionals and to promote the behaviours across the Group that will deliver the Group's strategy.

·; For the most senior leaders in the business, new share based incentive arrangements are being proposed to promote the continued retention of these individuals and to ensure a direct alignment of their interests with those investors acquiring New Ordinary Shares in the Placing.

Even with the ongoing practical challenges of operating a share-based plan over Ordinary Shares, the Board (led by the Company's remuneration committee of independent directors and after consultation with the potential investors in the Placing) believes that a new share incentive plan is the most appropriate mechanism to incentivise the Company's most senior executives. This group of individuals are viewed as being the equivalent of "equity partners" in a traditional professional services firm, and includes the Executive Directors.

The new share incentive plan, to be called the "WYG Transformation Incentive Plan" (the "TIP"), will be established following Admission. It will contain the following key features:-

·; The TIP will operate over 21,568,599 Ordinary Shares (being a number equivalent to 25 per cent. of the Enlarged Issued Ordinary Share Capital as diluted by the number of Ordinary Shares available under the TIP).

·; The TIP will operate as a standard long-term incentive plan under which share option awards will be granted. The exercise price for awards will be nil or a nominal amount.

·; Awards under the TIP will only vest if challenging and stretching performance conditions are achieved. To ensure the most direct alignment between participants and recovery in shareholder value, awards will vest only on achievement of the share price threshold targets for the Ordinary Shares shown in the table below:-

For the purposes of the performance condition:-

·; award shares will be vested only if the Ordinary Share price (calculated using a 25 Trading Day volume weighted average price) is above the relevant performance threshold for a period of 25 consecutive Trading Days; and

·; the performance condition will be measured for a period of up to five years from the date of Admission.

Following the achievement of a share price threshold, award shares which have vested will only be released to participants after a further period of 12 months (the "release date"). However, where a TIP award is exercised before the third anniversary of Admission, there is a requirement that 50 per cent. of the net of tax number of vested award shares must be retained until the third anniversary of Admission. This requirement can, however, be relaxed if the £1.25 threshold has been achieved before the third anniversary of Admission.

If a participant leaves before he is entitled to acquire vested shares on a release date, the individual will generally lose all his rights under the TIP. There will be exceptions in the cases of death, ill-health or disability (as determined by the Company's remuneration committee), or in other exceptional circumstances at the remuneration committee's discretion, where a participant can retain the right to receive previously vested shares at the next release date (or earlier, in the case of death only). Additionally, if the Company terminates a participant's employment after achievement of a performance threshold, but before the relevant release date, then (other than in cases of misconduct) the participant will be permitted to receive the vested shares at that release date.

Upon an offer for the entire issued share capital of the Company, awards under the TIP will only vest to the extent that the performance condition has been satisfied.

To become a participant in the TIP, an individual within the "equity partner" group must:-

·; undertake to purchase Ordinary Shares with 50 per cent. of the net of tax amounts of all bonuses received from Admission until the third anniversary of Admission or, if earlier, until the time when the individual's personal shareholding is equivalent to 100 per cent. of his post-tax annual base salary (200 per cent. for the Chief Executive);

·; hold all Ordinary Shares acquired with annual bonuses until the third anniversary of Admission;

·; enter into new restrictive covenants which extend existing "non-compete" protections for the Company.

If an "equity partner" participant breaches the share retention requirements described above, the level of that individual's unvested awards under the TIP will be subject to "clawback" (on a basis determined by the Company's remuneration committee).

Awards under the TIP will be made at levels that the Company's remuneration committee consider appropriate to achieve incentivisation and lock-in of the equity partner group. It is proposed that awards to Executive Directors will be made at the following levels:

·; Paul Hamer - 4,313,720 Ordinary Shares (being equal to five twenty-fifths of the total number of Ordinary Shares available under the TIP).

·; David Wilton and Graham Olver - 1,941,174 Ordinary Shares each (being equal to 2.25 twenty- fifths each of the total number of Ordinary Shares available under the TIP).

Chairman's Matching Share Award

The Board continues to rely heavily upon the strategic input of the Chairman, and accordingly it is considered appropriate to establish a separate share matching arrangement for the Chairman to ensure his continued retention within the business (the "Matching Share Award"). The Matching Share Award will be established after Admission and will have the following key factors:-

·; The Chairman will invest £100,000 in the Placing to acquire New Ordinary Shares.

·; In return for this investment, he will be granted a share option award of 2.5 matching Ordinary Shares for each Ordinary Share so acquired, being a total of 500,000 Ordinary Shares (the "Matching Shares"). This will be a standard award to acquire Ordinary Shares for a nil or nominal amount. There are no performance conditions that apply to this award.

·; The Matching Shares will vest on the third anniversary of Admission, provided that the Chairman is still a director of the Company and that he continues to hold all of the Ordinary Shares he acquired as described above. There are also exceptions where vesting could occur if the Chairman ceases to hold office. These exceptions are similar to those applying under the TIP.

·; The Chairman may not sell any of the Matching Shares until a further 12 months after these shares vest (except where required to cover any income tax liabilities arising from the acquisition of the Matching Shares).

In addition, the Chairman will receive an allocation of share awards which are on the same terms as the TIP (but without the share retention, clawback or restrictive covenant requirements described for "equity partner" participants above) (the "Chairman's Share Award"). The Chairman's Share Award will be taken into account when determining the overall limit on the number of Ordinary Shares available under the TIP. The Chairman's Share Award will relate to 862,743 Ordinary Shares which will represent an allocation of one twenty-fifth of the total number of Ordinary Shares available under the TIP, as described above.

Related Party Transaction

The Lenders are "substantial shareholders" as defined under the AIM Rules. Accordingly, the entry into the Debt Conversion Agreement and the Framework Agreement and the issue of the Convertible Shares to the Lenders constitutes a "related party transaction" for the purposes of Rule 13 of the AIM Rules. In accordance with the AIM Rules, the Directors, having consulted with the Company's nominated adviser, Arbuthnot Securities, consider that the entry into the Debt Conversion Agreement and the Framework Agreement and the issue of the Convertible Shares is fair and reasonable insofar as Shareholders are concerned.

The issue of awards in respect of Ordinary Shares to the Executive Directors and the Chairman pursuant to the TIP, the Chairman's Share Award and the Matching Share Award constitutes a "related party transaction" for the purposes of Rule 13 of the AIM Rules. In accordance with the AIM Rules, the remaining directors of the Company being the Independent Directors, having consulted with the Company's nominated adviser, Arbuthnot Securities, consider that the issue of awards in respect of Ordinary Shares is fair and reasonable insofar as Shareholders are concerned.

Current Trading and Outlook

In the Preliminary Results Announcement, the Company provided the following update on the Group's current trading and outlook:

"Market conditions remain largely as they were when we announced our interim results on 31 March 2011. Business conditions in the UK continue to be challenging and, although revenues are now stabilising, there is still limited visibility of future work in both the public and private sectors. There are early signs of some modest improvements, particularly in relation to private sector development, ongoing retail expansion and the drive for green and renewable energy generation but, overall, the scale and timing of any sustained recovery in the UK remains very difficult to predict.

Outside the UK, we continue to see a significant and growing pipeline of opportunities in our key regions. These opportunities are in both the donor funded sector, in which we continue to have a strong and established track record, and also in the international public and private sector markets.

Overall, in the current financial year, WYG is trading in line with the Board's expectations. Much has been achieved over the past two years to recreate a stable platform from which to operate and to grow. WYG is a significant organisation, employing over 1,500 people in the UK and internationally and delivering on some of the most sophisticated assignments in our chosen markets. There is further work to be done but, based on the substantial progress to date, if the proposed capital restructuring is successfully completed then WYG will be far better positioned to deliver growth and enhance the value of the Company over the medium term."

Dividends and Dividend Policy

The Board believes that the cash generated by the Group should be used to take advantage of the opportunities that now exist to grow in the Group's chosen markets and to attract and retain talented employees. Accordingly, the Board does not expect to pay a dividend in the foreseeable future.

Subject to the above and the restrictions on dividend payments included within the New Articles in relation

to the Convertible Shares, the Board intends to resume dividend payments when possible and appropriate.

General Meeting

The Circular containing a notice of General Meeting, setting out the Resolutions and convening a General Meeting to be held on 11 July 2011 at 11 a.m. at the registered office of the Company, Arndale Court, Otley Road, Headingley, Leeds LS6 2UJ will be posted to shareholders today.

The Proposals are conditional upon, inter alia, Shareholder approval being obtained at the General Meeting.

Shareholders should note that the Directors will not be able to proceed to implement the Proposals unless and until all of the proposed Resolutions are approved at the General Meeting, since the Resolutions are inter-conditional.

Irrevocable Voting Undertakings

The Company has received irrevocable undertakings to vote in favour of the Resolutions to be proposed at the General Meeting from certain Shareholders holding, in aggregate, 30,007,991 Existing Ordinary Shares representing approximately 85.0 per cent. of the Existing Issued Ordinary Share Capital.

Importance of Vote

The Proposals are conditional upon, inter alia, Shareholder approval being obtained at the General Meeting.

Shareholders should note that the Directors will not be able to proceed to implement the Proposals unless and until all of the proposed Resolutions are approved at the General Meeting, since the Resolutions are inter-conditional.

Shareholders are therefore strongly recommended to vote in favour of all Resolutions to be proposed at the General Meeting by completing the enclosed Form of Proxy and returning it to the address marked on it as soon as possible and, in any event, so as to be received by no later than 11am on 9 July 2011.

In the event that the Resolutions are not passed at the General Meeting and the Proposals are not implemented, then going forward the Group is will be unable to satisfy its existing financial covenants and/or service its existing borrowings. In such an event, the Group would be in default under the Existing Facilities Agreement. Such a default under the Existing Facilities Agreement would entitle the Lenders to demand repayment of all outstanding amounts and to cancel the facilities. Although the Board has worked with the Lenders to develop alternative options in the event that the Resolutions are not passed, there is no certainty that any such options could be implemented. The Group could then face administration or other insolvency proceedings as the Board believes that alternative sources of debt or equity finance are unlikely to be available, or that such alternative sources, to the extent they are available, would be likely to involve the insolvency of all or part of the Group. Both such outcomes would, in the Board's opinion, result in Shareholders receiving no value for their current shareholdings.

Recommendation

The Board considers the Restructuring and the Placing to be in the best interests of the Company and its Shareholders as a whole. The Related Party Directors stand to benefit from the new incentive arrangements if the Resolutions are passed and the Proposals are implemented. Accordingly, the Independent Directors recommend that the Shareholders vote in favour of the Resolutions as the Directors (who are Shareholders) intend to do in respect of their own registered holdings of Ordinary Shares, which amount in aggregate to 15,050 Existing Ordinary Shares representing approximately 0.04 per cent. of the Existing Issued Ordinary Share Capital.

DEFINITIONS

The following definitions apply throughout this announcement, unless the context requires otherwise: