11th Dec 2020 09:58
(Alliance News) - Hotel operator InterContinental Hotels Group PLC on Friday said it has agreed a further amendment to its revolving credit facility to include a waiver of covenants at the end of 2021.
This follows an amendment in April this year that amended the existing USD1.35 billion syndicated and bilateral revolving credit facilities to include a waiver of existing covenants at June 30 and December 31 of 2021, as well as June 2021.
The new amendment includes an additional waiver of the covenants at December 31, 2021, together with a relaxation to the covenants at June 30, 2022 and December 31, 2022.
The leverage ratio covenant has been amended to require net debt to Ebitda of less than 7.5-to-1 at June 30, 2022 and less than 6.5-to-1 at December 31, 2022.
"The covenant relaxations have been based on a theoretical severe downside scenario. The minimum liquidity covenant of USD400 million will continue whilst the amendments are in place and will be tested at December 31, 2021, June 30, 2022 and December 31, 2022," the Denham, England-based firm said.
Ahead of its 2020 results, InterContinental Hotels said it has made changes in income recognised in its System Fund and in its results from reportable segments.
Changes include recognising revenue from licencing of intellectual property under co-brand credit card agreements in its reportable segments under central revenue, instead of in its System Fund.
Given that only a proportion of revenue associated with its intellectual property will move, most revenue associated with its cobrand portfolio will still be recognised in the System Fund.
Additionally, InterContinental Hotels will recognise revenue, costs, and profit from its Ambassador programme - a paid-for loyalty programme - in its System Fund and not its reportable segments.
The changes are effective from January 2020 while amounts recognised in previous years have not changed.
However, if these changes had been effective in 2019 then InterContinental Hotels' revenue would have increased by USD18 million and its operating profit from reportable segments by USD22 million, with corresponding reductions in System Fund revenue and increase in the System Fund in-year deficit.
InterContinental Hotels is expecting "a broadly similar impact" to this in 2020.
Shares in InterContinental Hotels were marginally lower at 4,778.00 pence in London on Friday morning.
By Anna Farley; [email protected]
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