Retailer and FTSE 250 constituent Debenhams (LON:DEB) has signed a new £650 million credit facility to complete the refinancing of its borrowing facilities.
The new facility will start with the conclusion of the current facility in April 2011 and will consist of a £250 million term loan and a £400 million revolving credit facility that could be extended until October 2014. Following a proportion of the debt being hedged into fixed rate finance, the interest is expected to fall from 7% in the current financial year to 4.5% in the first full year of the new facilities.
Barclays Capital (LON:BARC), Lloyds Banking Group (LON:LLOY) and Royal Bank of Scotland (LON:RBS) acted as the mandated lead arrangers and bookrunners.
“The new facility puts Debenhams on a strong footing for the future, extending the group's debt maturity horizon beyond three years and, in combination with related hedging, significantly reducing the Group's interest charge for the future,” said finance director Chris Woodhouse.
The company said it remained a “highly cash generative and profitable business” and that it expected to continue its programme of net debt reduction over the coming years.