13th May 2015 08:13
LONDON (Alliance News) - SnackTime PLC Wednesday said the agreement it secured with its bankers to waive a breach of a cover covenant and to suspend all covenant testing until the end of September is subject to the completion of a GBP100,000 new equity issue by the end of May and a further GBP200,000 new equity issue by the end of November.
The struggling vending machine company had said at the start of April that its earnings before interest, tax, depreciation and amortisation halved to GBP550,000 in the financial year to March 31, from GBP1.1 million a year earlier, due to the failed sale of Drinkmaster, a decreasing vending estate and pressure on wholsesale revenue.
That drop resulted in what the company described as a "minor breach" of the Ebitda/interest cover covenant on its bank loans, but the company's bankers agreed to waive the breach and suspend future covenant testing until the end of September.
In a statement Wednesday, the company said the agreement with The Cooperative Bank was subject to completion of a GBP100,000 new equity issue by the end of May, money which will be used in full to reduce the outstanding balance on SnackTime's term loan to GBP1.92 million. It's then subject to the completion of a further GBP200,000 new equity issue by the end of November, which will again be used to reduce the outstanding balance on the loan.
SnackTime's biggest shareholder is Russian businessman and vending machine magnate Boris Belotserkovsky, who has increased his stake in the company through placings conducted since 2013. He currently holds 49.15% of the company, according to data on Morningstar.
SnackTime said that members of the Boris Belotserkovsky Concert Party are expected to subscribe for GBP25,000 of the first GBP100,000 issue, with the balance taken by some directors and senior management. The price for this issue will be 10 pence a share, a 33% premium on Tuesday's mid-market price.
The Boris Belotserkovsky Concert Party is expected to subscribe in full to the second GBP200,000 issue, the company added.
The company said it will make the previously scheduled term loan repayments of GBP110,000 as planned by the end of December, meaning that the loan will have been cut by a total of GBP1.61 million from GBP3.4 million in April 2013.
SnackTime said it is also looking at its existing loan notes, including the GBP600,000 of 2008 convertible loan notes that are due for redemption in December and a conversion of GBP67,500 that's due to some directors and other noteholders under the 2013 convertible loan notes. It said it will make further announcements in due course.
The company is in turnaround mode after its challenging year in 2014, when it called off the planned sale of its Drinkmaster business last year after potential buyer interest waned when the unit lost some of the business it had with its largest customer, William Hill PLC.
It had said last month that it had already secured new contracts in its vending division worth GBP2.5 million in operated revenue over five years starting in June 2015, while Drinkmaster was "enjoying the challenges" of delivering for its new 'Sealcup' product and its Snack in the Box franchise network was continuing to grow on a monthly basis.
SnackTime shares were down 6.0% at 7.05 pence Wednesday morning. The stock is down 22% so far in 2015 and down 39% over the past 12 months.
By Steve McGrath; [email protected]; @stevemcgrath1
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