4th Aug 2020 09:16
(Alliance News) - Melrose Industries PLC on Tuesday said it has agreed improved financial covenants with its lenders out to December 21, 2022.
The FTSE 100 turnaround specialist said the covenant amendments include a waiver of the test of net debt-to-earnings before interest, tax, depreciation and amortisation to the end of 2021.
Melrose said it has extended the previously agreed waiver of the net debt-to-Ebitda covenant to include the June 30 test next year. After that, the test will be 5.25 times on December 31 next year, 4.75x on June 30, 2022 and 4.0x on December 31, 2022.
The agreement also sets the Ebitda-to-net finance charges covenant at 2.5x on December 31 of this year, then 3.0x on June 30 and December 31, 2021, 3.25x at the end of June 2022, and 4.0x at the end of December 2022.
Melrose said there was a "modest cash cost" to secure the amendment. It also noted that it would have met both the June 30 tests, and didn't require the net debt-to-Ebitda waiver for that date that was granted previously.
The company said the amendments cover all its primary borrowing arrangements that contain financial covenants, which include a committed GBP3.2 billion revolving credit facility repayable in January 2023 and a committed term loan of around GBP900 million that has the option to be extended to April 2024.
It said it also has a GBP450 million bond maturing in September 2022 and a GBP300 million bond maturing in May 2032, neither of which contain financial covenants.
"We have now put in place new amended arrangements with our banks that last until the end of 2022. We thank our banks again for their continued support which gives us the headroom and flexibility to continue to focus on cash generation and adapt the group as needed. Melrose also retains over GBP1 billion of cash liquidity," said Chief Executive Simon Peckham.
Shares in Melrose were trading 5.6% higher at 92.20 pence each on Tuesday morning in London.
By Ife Taiwo; [email protected]
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