Debenhams Refinances Debt With New GBP650M Credit Facility

19th Jul 2010 07:29

By Lilly Vitorovich Of DOW JONES NEWSWIRES LONDON (Dow Jones)--U.K. department store chain Debenhams PLC (DEB.LN) said Monday it has completed its debt refinancing with a new GBP650 million credit facility, which was well received by investors. Debenhams said "demand for the facility was strong giving rise to a healthy level of over subscription." The new GBP650 million senior facility consists of a GBP250 million term loan and a GBP400 million revolving credit facility, which expires in October 2013 with an option to extend to October 2014. Finance Director Chris Woodhouse said the group is "delighted to have completed the refinancing well in advance of the expiry of the existing facility in April next year." "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," he added. Debenhams, the nation's second biggest department store chain by sales behind Marks & Spencer Group PLC (MKS.LN) "continues to be a highly cash generative and profitable business and we expect to continue our program of net debt reduction over the coming years," Woodhouse said in a statement. Following a proportion of the debt being hedged into fixed rate finance, it's anticipated that the interest cost net of fees will fall from around 7.0% in the current financial year to around 4.5% during the first full year of the new facilities, according to Debenhams. The new facility will start in April 2011 on the expiry of the existing bank facility. Associated refinancing costs of around GBP10 million will be capitalized and amortized over the life of the new facility, starting in April 2011. The mandated lead arrangers and bookrunners were Barclays Capital (BARC), Lloyds Banking Group PLC (LLOY.LN) and Royal Bank of Scotland Group PLC (RBS.LN). Debenhams shares closed at 58 pence Friday, valuing the company at GBP750 million. -By Lilly Vitorovich, Dow Jones Newswires; 44-0-207 842 9290; [email protected] (END) Dow Jones Newswires July 19, 2010 02:29 ET (06:29 GMT)