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Heywood Williams Grp (HYWD)

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Wednesday 18 February, 2009

Heywood Williams Grp

Update on Financing

RNS Number : 4771N
Heywood Williams Group PLC
18 February 2009
 





18 February 2009



HEYWOOD WILLIAMS GROUP PLC 


UPDATE ON FINANCING


Heywood Williams Group PLC, the specialist distributor of branded building products, is pleased to issue this update on its previously announced financing discussions.


The markets in which the Group operates declined significantly in 2008 and further decline is expected in 2009. The Group's priority over the medium term is to manage its balance sheet and maximise cash generation in order to weather the current difficult market conditions and be well positioned for the subsequent market upturn.


The Group is pleased to announce new medium term funding arrangements in both North America and with its UK banking syndicate.

 

In North America, LaSalle Bristol has recently successfully replaced a one year committed $6 million credit facility with a new three year asset based $10 million facility. This facility is exclusively for the use of LaSalle Bristol and hence LaSalle Bristol has ring-fenced funding for the next three years.


The Group's main committed banking facility is in the UK. The Group has a £60 million syndicated facility with scheduled repayments of £1.67 million per quarter from September 2009. The facility runs to September 2011. The Group has successfully agreed the following with both its UK banking syndicate and the independent trustee of the UK final salary pension plan:

 
1.   The UK banking syndicate has reconfirmed that a committed £60 million facility is available to the Group until 30 June 2010 based on revised covenants following which the original covenants will apply.
 
2.   The UK banking syndicate has agreed to defer capital repayments totalling £6.7 million, which were due to be made in the period September 2009 to June 2010, to be paid on a quarterly basis commencing in September 2010 through to September 2011.
 
3.   In addition, the independent trustee for the Group’s UK final salary pension plan has agreed to support the Group by suspending previously agreed deficit repair contributions totalling £3.75 million covering the period January 2009 to March 2010. These suspensions will be recovered over the period from April 2010 to December 2013.
 
4.   The Group has agreed new covenants with its UK banking syndicate which more appropriately reflect current trading conditions. The three covenants, to be tested quarterly, relate to EBITDA, operating cash flow and operating net assets measured on the Group’s UK, Avenco and Chinese companies only. Covenant levels have been set which provide comfort for the banks, whilst providing the Group with the flexibility required to operate its businesses in the current market conditions and allow for investment in new products and other planned value adding opportunities.
 
5.   The Group has agreed to work with its UK banking syndicate to seek to establish a more appropriate long term capital structure for the Group. In the event that certain milestones are not met and as a result a satisfactory long term capital structure is not implemented by 30 September 2009, a charge of £4.5 million would be levied by the banks with payment due in five quarterly instalments commencing in September 2010.
 
6.   Interest on borrowings from the UK banking syndicate will be calculated at 3.75% above LIBOR and £1.4 million of advisor and arrangement fees have been incurred in connection with these changes. This cost will be charged as part of the operating exceptional charges in the Group’s 2008 accounts.



The Group's preliminary results will be published on 4th March 2009.


In summary, the Group continues to have a supportive and close working relationship with its banks who have been apprised of the market challenges that the Group faces. Significant medium term funding has been put in place in both North America and in the UK, with appropriate covenants to provide sufficient support and stability for the Group to deal with these difficult market conditions in the medium term. Furthermore, the Group is committed to working with its UK banking syndicate in implementing the most appropriate long term capital structure for the Group during 2009.




Contacts:



Heywood Williams Group PLC

Tel: 01422 328850


Robert Barr, Chief Executive



Mike Richards, Finance Director






Financial Dynamics

Tel: 020 7831 3113


Jon Simmons/Sophie Moate






This information is provided by RNS
The company news service from the London Stock Exchange
 
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