Refinancing to support Strategic Objectives

RNS Number : 9876H

Sportech PLC

19 July 2012

 

Sportech PLC ("Sportech" or "the Group")

Sportech secures refinancing to

support strategic objectives

Key highlights

·    New multi bank facilities to provide debt refinancing

·     Banking relationships strengthened with new multi bank structure replacing single bank arrangement

·     Overall size of facilities increased by 25% to support growth of the business

·     New arrangements provide flexible financial covenants

Sportech Plc is pleased to announce that it has signed new banking facilities with immediate effect.

The Group has entered into a new £75 million, multi currency revolving credit facility, to include up to £5m of ancillary working capital facilities across key trading jurisdictions, provided by Bank of Scotland Plc, Barclays Bank Plc and The Royal Bank of Scotland Plc (the "Facility").

The Facility has an initial debt maturity date of 31 August 2015, which is able to be extended at the Group's request, with the agreement of the lenders, for a further 12 month period.

The Facility replaces the Group's previous amortising loan facilities provided solely by the Bank of Scotland Plc, which were due to expire in July 2013 and consisted at the time of refinancing of a £55.5m term loan and a £3m UK working capital facility.

Within the terms of the Facility, the Group believes it has operational flexibility to implement its medium term plans. Financial covenants provide increased flexibility with consolidated total net borrowings to adjusted EBITDA ("leverage") required to be no higher than 2.75x for testing periods through to March 2014, then reducing to a maximum of 2.50x through to March 2015 and thereafter a test level of a maximum 2.25x. The Group's borrowing costs will be dependent on the ongoing level of leverage with a debt margin payable of between 250 and 375 basis points per annum. Commitment fees will also apply at normal commercial rates. An arrangement fee of 1.75% is payable at the outset of the Facility which will be expensed during 2012 along with associated refinancing, legal and debt advisory fees.

Of particular note, the Group has secured agreement with the lenders that the Facility will remain in place in its entirety should the Group be ultimately successful in its ongoing Spot the Ball VAT claim against HM Revenue & Customs, due to be heard at the First Tier Tax Tribunal in October of this year.

As a related point to the refinancing, the Group's existing interest rate swaps will no longer remain eligible for hedge accounting under International Financial Reporting Standards following the refinancing. Accordingly, in the second half of the Company's financial year ending 31 December 2012, the existing mark-to-market exposures of the interest rate swaps will be required to be applied to the income statement. At the date of this announcement, the mark-to-market exposures under the interest rate swaps, which it is noted are entirely of a non-cash nature, are approximately £3.3 million.

For further information contact:

Sportech PLC	020 7268 2400
Ian Penrose, Chief Executive
Steve Cunliffe, Finance Director
Pelham Bell Pottinger	020 78613232
David Rydell
Emma Kent
Rosanne Perry

 

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