30th Oct 2007 12:54
Dobbies Garden Centres PLC30 October 2007 Dobbies Garden Centres plc (the "Company") Related party transaction The Company announces that it has entered into a committed revolving loanfacility agreement with Tesco PLC ("Tesco") on 30th October 2007 under whichTesco has agreed to provide a committed revolving facility (the "Facility") ofup to a maximum amount of £110 million. Amounts advanced under the Facility willbear interest (payable quarterly) at a rate of (a) 3-month LIBOR plus 0.60% inrespect of the first £20 million of the Facility drawn down from time to timeand (b) 3-month LIBOR plus 0.85% in respect of amounts drawn down under theFacility in excess of £20 million from time to time. The Facility is repayablein full on 30th October 2017, save that, (a) if a change of control of theCompany occurs, Tesco shall have the right to cancel the Facility on 30 days'notice and upon cancellation the Facility (together with interest accruedthereon) shall become immediately repayable, and (b) if the Company defaults onany payment due under the Facility, Tesco may by notice to the Company forthwithcancel the Facility and the Facility (together with interest accrued thereon)shall become immediately repayable. The Company will draw down under this Facility to repay in full the amountscurrently drawn under the Company's existing term loan and working capitalfacility with Bank of Scotland plc which totals £84.9m. The Company have enjoyeda long standing relationship with Bank of Scotland plc, and Bank of Scotland plcwill remain the Company's relationship banker for transactional banking andworking capital funding. The Company intends to use the balance of the Facility provided by Tesco tofinance the Company's ongoing new store development programme. As Tesco is a substantial Shareholder of the Company (having a beneficialinterest in approximately 65 % of the Company's share capital), the provision ofthe Facility by Tesco to the Company is a related party transaction according tothe AIM Rules. The Directors of the Company, having consulted with its nominatedadviser, Brewin Dolphin, consider the terms of the Facility to be fair andreasonable insofar as the Company's shareholders are concerned. Given the Company's expansion plans, it is the intention of the Board that cashgenerated from operations will be used to fund future growth rather than bedistributed as a dividend to shareholders. A review of additional fundingrequirements and possible sources of those funds is underway. James Barnes, Chief Executive, said: "As previously stated, the Company's strategy for the future remains unchanged -to position Dobbies as the leading gardens and homes retailer in the UK and todevelop the horticultural and environmental aspects of our brand that reinforceour position as first choice for plants and gardening. I believe we have aunique opportunity to deliver this. Our ambition is to raise the growth rate of the business in the coming years,through new site developments, by acquisitions as and when appropriate, and viaour new internet business." For further information, please contact:Sharon Brown, Dobbies Garden Centres plc 0131-663-6778(Finance Director) Sandy Fraser, Brewin Dolphin 0131-225-2566(nominated advisor and joint broker to Dobbies) Antonia Coad, Bell Pottinger Corporate & Financial 0207-861-3232(financial PR advisor to Dobbies) This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Tesco