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Young's secures new financing facilities to weather Covid-19 closures
13th May 2020 09:42
(Sharecast News) - Young & Co's Brewery said on Wednesday that it has secured new financing facilities to strengthen its balance sheet further and enable the pub group to withstand a prolonged period of closures due to the Covid-19 pandemic.
The company has agreed with NatWest and HSBC to a new ?50m syndicated term loan facility, to be split evenly between those two banks for five years. In addition, it is in the process finalising a new ?20m bilateral revolving credit facility with NatWest that has a one-year maturity.
Young's also said it has been confirmed as an eligible issuer for the HM Treasury and the Bank of England's Covid Corporate Financing Facility, under which it has issued paper with a nominal value of ?30m and a maturity date of 13 May 2021.
This means Young' will have in place ?285m of funds and committed facilities from its lending banks, private placement lenders and under the CCFF. It also has a ?10m overdraft with HSBC.
The company said its lending banks have agreed to waive any technical 'cessation of business' breach of its banking facilities as a result of pubs being closed due to the pandemic. They have also agreed in principle to replace Young's financial covenant tests at June, September and December this year and at March next year with a liquidity test.
"With the group's strong balance sheet, supplemented by the actions announced today, the company's board of directors is confident that Young's has sufficient liquidity to handle a prolonged period of closure of its pubs," it said. "The board expects the company to be in a position to return to profitable growth when this unprecedented period is at an end and conditions allow."
Broker Liberum said: "We view Young's as one of the most resilient pub companies considering its strong balance sheet, high-quality freehold estate and considerable financial headroom, which should see it survive an extended lockdown scenario.
"Additionally we see the 83% asset backing (combined with low gearing) as being a strong store of shareholder value."
The company has agreed with NatWest and HSBC to a new ?50m syndicated term loan facility, to be split evenly between those two banks for five years. In addition, it is in the process finalising a new ?20m bilateral revolving credit facility with NatWest that has a one-year maturity.
Young's also said it has been confirmed as an eligible issuer for the HM Treasury and the Bank of England's Covid Corporate Financing Facility, under which it has issued paper with a nominal value of ?30m and a maturity date of 13 May 2021.
This means Young' will have in place ?285m of funds and committed facilities from its lending banks, private placement lenders and under the CCFF. It also has a ?10m overdraft with HSBC.
The company said its lending banks have agreed to waive any technical 'cessation of business' breach of its banking facilities as a result of pubs being closed due to the pandemic. They have also agreed in principle to replace Young's financial covenant tests at June, September and December this year and at March next year with a liquidity test.
"With the group's strong balance sheet, supplemented by the actions announced today, the company's board of directors is confident that Young's has sufficient liquidity to handle a prolonged period of closure of its pubs," it said. "The board expects the company to be in a position to return to profitable growth when this unprecedented period is at an end and conditions allow."
Broker Liberum said: "We view Young's as one of the most resilient pub companies considering its strong balance sheet, high-quality freehold estate and considerable financial headroom, which should see it survive an extended lockdown scenario.
"Additionally we see the 83% asset backing (combined with low gearing) as being a strong store of shareholder value."