Northgate refinancing adds £1m to interest costs

20th Apr 2011 08:29

The finance director at light commercial vehicle hirer Northgate can sleep a bit easier now that the company has concluded a comprehensive debt refinancing.The group has secured a new eight year £100m term loan facility from the Prudential/M&G UK Companies Financing Fund. The loan is repayable in three equal chunks in October 2017, April 2018 and April 2019.The pricing on the facility is 4.25 percentage points above the London interbank offered rate (LIBOR - the rate banks use as a benchmark when they lend to each other).The group has also agreed a substantially changed committed bank facility with an extended maturity of September 2014. This will initially have a ceiling of £470m which will be lowered to £395m in November 2012 to reflect the group's expectations of its cash flow and resultant debt-reduction.The interest costs under this facility are projected to save the group £1.3m in the year ending 30 April 2012 compared to the facility it replaces.Taking into account the £173m of the group's loan notes in circulation, the group has a total of £743m of committed facilities up to the financial year end of April 2012, after which the total drops to £620m the following year.These amounts provide the group with substantial headroom above its forecast debt requirements, Northgate said.The group has also made changes to its currency and interest rate hedging portfolio to reflect the new structure of the facilities.Based on current debt levels, interest costs in the financial year ending 30 April 2012 will be around £1.0m higher than if previous rates had prevailed. ---jh