Cash-strapped HSS Hire Group PLC (LON:HSS) has successfully refinanced its corporate debt.
The tool hire group has entered into a new term loan facility of £220mln and a revolving credit facility of £25mln.
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The company said £200mln of the £220mln term loan facility is scheduled to be repaid by June 2023 while the remaining £20mln will need to be repaid by December 2020 or earlier, should HSS wish.
This facility is at interest rates of between seven and eight percentage points over the London interbank offered rate (Libor) dependent upon the net debt leverage ratio of the group.
"We are very pleased to have successfully secured the long-term refinancing of the group. This now ensures that we have the appropriate facilities in place to continue delivering on our strategic priorities and the group's full potential," said Paul Quested, the chief financial officer of HSS.
Numis Securities noted the new £245mln debt facilities are more expensive than those that they replace, and accordingly it has reduced its profit forecasts.
It is now forecasting a loss before tax of £2.2mln for the current financial year, compared to a previous forecast of a profit of £0.1mln.
The forecast of a profit before tax of £4.9mln for next year become a forecast of a loss before tax of £1.7mln, with the company returning to profit in 2020, with forecasts of profit of £2.3mln, down from the previous forecast of £9.1mln.
“The two principal components of HSS's previous debt structure were a quoted senior secured note of £136mln (with a fixed rate coupon of 6.75%) that matured in 2019, and an RCF [revolving credit facility] of £80mln (on which HSS was latterly paying LIBOR+3%, and was £74mln drawn at 1-April-2018) that expired in July 2019,” Numis disclosed.
“The new RCF, which will mature in December 2022, will be provided by HSBC and National Westminster, and pay interest at LIBOR+ 250-300bp [basis points], dependent on leverage. Management has not disclosed the leverage covenants of the new facilities (net debt/EBITDA was 4.0x in April 2018); however, the new term loan will cover the cost of retiring the SSN [senior secured note], the old RCF facility and the re-financing costs, leaving the new RCF facility undrawn,” the broker added.
Shares in HSS were down 1.8% at 32p.