01.07.2011

Speedy agrees new credit line

Speedy has agreed a new £220 million asset based revolving credit line with a syndicate of six banks to replace its existing £210 million cash flow based loan facility, which was due to mature in June of next year.

The facility, which matures in January 2015, will be used for general corporate purposes. The credit line has no scheduled repayment requirements prior to the maturity date and is priced at LIBOR plus 2.25 to four percent, depending on leverage and on the components of the borrowing base.

Initial drawings under the new facility will be at a blended rate of LIBOR plus around 3.25 percent, which is 25 basis points lower than that currently paid.

In addition to four existing lending banks continuing to provide support to the Group, the bank syndicate has been strengthened by the addition of two new banks, Bank of America and GE Capital, who both have extensive experience of the US asset based lending market, where this type of facility is extensively used by the major rental companies.

As a consequence of adopting an asset based financing solution, the group’s previous financial covenants have been reduced and simplified and headroom within the new facility has been increased. The company expects to record an exceptional financing cost of approximately £2.2 million in the first half of the year for the non-cash write-off of the remaining unamortised balance of costs associated with the previous facility.

Fees and expenses to establish the new facility will be amortised over the period to January 2015. For the remainder of the current financial year, this will involve a non-exceptional financing cost of approximately £1 million.

Speedy’ s chief executive Steve Corcoran said: “We are delighted that our leading relationship banks have participated in the new revolving credit facility and that two new lenders have also joined the syndicate. The support of our banks in providing a facility which gives additional headroom and is more flexible is a great vote of confidence and illustrates both the strength of our balance sheet and the quality of our asset base. We now have certainty with regard to our medium term funding, this is another key step in our recovery and will underpin our strategy to grow the business in the years ahead.”