Loss-making wealth manager and Financial Planner WH Ireland has raised £5m today through an urgent share placing to help it avoid being wound up.

As part of the arrangement, CEO Philip Wale will take a 30% pay cut in return for share options.

Other senior executives, including head of wealth management Michael Bishop, are also taking pay cuts.

Job losses and other staff pay cuts are on the cards as the firm fights to improve its poor financial position.

The firm has been in discussion with the FCA about its financial position which could have resulted in the company being wound up if the share placing was unsuccessful.

TFG Asset Management UK, the company's largest shareholder, participated in the share placing and now owns 38% of the business. It agreed to participate in the new share placing up to a maximum of £2.5 million.

WH Ireland has struggled in recent times to cope with a downturn in its capital markets business and declining AUM in its wealth management business. It is currently losing money, it says, and this cannot continue.

The new shares were priced at 3p per share and offered to selected existing shareholders. The placing price is a discount of approximately 86.67 per cent to the closing price of 22.5 pence per Ordinary Share on 27 July.

Following the share placing this morning the share price of the company's ordinary shares dropped by over 60% to 8.8p. 

The directors say the cash is needed to ensure the continuation of the business which has been hit in recent times by losses and market turmoil.

In the three-month period ended 30 June, the company made a pre-tax loss of £1.1m on revenues of about £5.6m (unaudited).

The company said the loss was mainly due to a reported multi-year, low level of transactional activity in capital markets that has hit the group's capital markets division. The company has also seen a fall in assets under management (AUM) in its wealth management division, “in part due to weaker market conditions impacting client portfolio size.”

WH Ireland says that with market conditions remaining challenging the directors do not believe that there will be an improvement in capital markets transactional activity during the current quarter nor do they believe there will be an increase in AUM in the wealth management division in the short term.

Directors expect loss making for the company to continue until at least November.

Due to the financial challenges the company has been in discussion with the FCA about the group's net asset and regulatory capital positions. This was so that in the absence of the injection of further capital the company could deliver a “solvent wind down for the group, if required.”

The firm says the current regulatory capital position of the group (as at 30 June) is approximately a £1.9m shortfall below the current FCA regulatory capital requirement. 

Without the cash injection today the company said that it would have to consider winding up the business this month or a sale. The company says it is also in discussions with the FCA about voluntary restrictions, such as not paying dividends, for a period of time.

Job cuts and senior managers' sacrificing salary should provide a cost reduction of upto £4m a year, the firm says, and help stabilise finances.

Following the share placing this morning, Phillip Wale, CEO said "The proceeds of today's placing bolsters our regulatory capital and together with the cost reductions we are implementing, we believe provide a stable platform from which the company can navigate these challenging markets. I am grateful for the support of our existing and new shareholders and believe we are in a stronger position to take advantage of better market conditions as and when they come."

As at 30 June the company had cash of £3.7m (unaudited), Assets Under Management in wealth manager were £1.34bn and group Assets Under Management were £1.95bn.

• This is a developing story - please check back for updates.