Heywood in danger of breaching covenants

Shares in Heywood Williams, which makes PVC doors, windows and conservatory frames, collapsed yesterday after the company unveiled a dramatic restructuring, involving 300 job losses in the UK, parted company with its chairman, Hamish Bryce, and warned it might not pay a final dividend. It also said it was now holding talks with its banks since its restructuring plans put it in danger of breaching covenants attached to about £45m of borrowings.

Shares in Heywood Williams plunged 44 per cent, or 58.5p, to close at 74p. The stock also fell sharply at the end of July after the company issued a profits warning that forced the resignation of its chief executive, Ian Stuart. The company said that the restructuring needed to set it back on course would be centred mainly on its UK operations and would cost it about £25m. It is exiting a number of unprofitable businesses and axing 15 per cent of its UK workforce as well as taking an impairment charge and booking a write-down of surplus stock, debts and assets.

Heywood Williams also said it could no longer recommend a maintained final dividend for the year "in light of the scale of the action necessary" to restore profitability. It said it would decide whether it was "possible or appropriate" to pay a final dividend. The company also said its banks had been "fully appraised" of the moves "in view of the substantial sums involved" and the "potential impact" on year-end covenants. It is now in the process of presenting its plans to the banks.

The "severity" of the move was behind Mr Bryce's decision to retire. He had spearheaded the review of the business after he was elevated to the position of executive chairman after Mr Stuart's resignation.

The company said it expected the second half of the year would be no better than the first half, when it recorded a pre-tax loss of £1.7m.

Mr Bryce, who joined the company as non-executive chairman in 1999, will be replaced by Roger Boyes, who is currently the company's deputy chairman.