Snoozebox reaches agreement with lenders on revised payments

11th Nov 2016 14:17

(ShareCast News) - Snoozebox Holdings updated the market on discussions it has held with its primary lender on Friday.The AIM-traded company had previously announced that it had initiated discussions with its primary lender in the first half of 2016, seeking an amendment to its debt servicing obligations.It reported on Friday that a number of amendments have been agreed, effective immediately.The first agreed amendment was that the cash balance held by the group in a 'restricted cash' bank account, equal to £1.3m at the date of the amendment, will be transferred to the primary lender and applied against the outstanding capital balance, reducing the gross outstanding capital balance as at the date of this announcement to £7.6m;Second, debt servicing payments for each of the next three quarters to January, April and July 2017, have been reduced to interest only, resulting in quarterly payments due of £0.18m per quarter.The board said the total now payable over the next three quarters of £0.54m compared to £1.4m of capital and interest debt servicing payments that was due for these three quarters prior to the amendment.Finally, subsequent debt servicing quarterly payments would now commence in October 2017, and will comprise interest and capital resulting in quarterly payments due of £0.5m per quarter, giving a total interest and capital debt servicing payment of £2.0m per annum, a level consistent with the £2.0m due per annum prior to the amendment.Debt servicing payments remain due in January, April, July and October each year, with the overall repayment term unchanged and a final quarterly payment due in April 2022.As of the announcement and after the application of the amendment, the group's cash balance will be approximately £2.6m with nil restricted cash, and the Group's net debt will be around £4.6m.Following the agreement to revise the group's debt servicing obligations, the board continues to have a "reasonable expectation" that the group has adequate resources to continue operationally for at least the next 12 months, it said.The group continues to maintain an open dialogue with its primary lender, who remains supportive of the board's strategy and plans, Snoozebox's directors added."This amendment, together with the cost reductions we have made that will take full effect in 2017, significantly reduces the cash outflow profile for 2017, consistent with the Board's business objective of establishing a more stable operating environment and improved financial stability," said executive chairman Chris Errington."We continue with our work to secure customer opportunities for delivery in 2017."