MCHL Mouchel Group

At 31 July 2010, the Group had credit facilities totalling GBP180.0m with the Royal Bank of Scotland, Lloyds TSB and Barclays. Of the GBP180.0m, GBP115.0m was in the form of revolving credit facilities, which were to reduce by GBP10.0m in March 2011 and 2012, with the remaining balances of GBP30.0m expiring on 1 August 2012, and GBP65.0m expiring on 31 October 2012. The balance of GBP65.0m was in the form of a term loan which also fell due for repayment on 31 October 2012.

Also drawn against the facility were bonds and guarantees as detailed in note 17. Interest under this facility was charged at LIBOR plus a margin. The margin ranged from 0.65% to 3.65% adjusted according to the ratio of net borrowings to earnings before interest, taxation, depreciation and amortisation.

On 26 January 2011 the Group signed new medium-term banking facilities with its existing relationship banks. The key terms of the new facilities were: total facilities of GBP170.0m extending to 31 March 2014; interest above LIBOR on the facility of 3.1% - 4.0% dependent on ratios; two repayments each of GBP7.5m on 31 July 2012 and 31 July 2013; in the event that an additional voluntary repayment of GBP30.0m had not been made before 31 May 2012, an increase in margin of 2% and the issue of warrants at that time over 5% of the issued share capital of the Company at an issue price of the lower of 75p per share and 80% of the share price at that time; and a restriction on resuming dividend payments until the voluntary repayment of GBP30.0m had been made.

The financial covenants applying to this facility and as defined therein were: the ratio of net debt (including bonds) to EBITDA; the ratio of EBITDA to net interest payable; and debt service coverage (the ratio of free cash flow to interest and principal repayments). Covenants were tested on a quarterly basis.

The first two of these covenants would have been breached on the announcement of our results for the year ended 31 July 2011. However due to the amendments to the Group's principal borrowing facilities referred to below, such breach has been avoided and no event of default has occurred. Consequently the amounts drawn down at 31 July 2011 totalling GBP135.0m are disclosed as due within one year. Also drawn against the facility are bonds and guarantees of GBP15.2m which are included in contingent liabilities in note 17.

On 29 November 2011, the Company agreed amendments to the terms of its principal banking facilities which now expire upto 31 March 2014. The purpose of the amendments is to avoid a breach of the banking facilities which would otherwise have occurred upon publication of the 2011 Accounts, to provide for a GBP16m increase (repayable on or before 28 February 2013) in the facilities available to GBP180m and to amend covenants with a view to avoiding future financial covenant breaches which would otherwise be expected to arise prior to April 2013. The amended credit facilities comprise:

-- GBP129.0m term loan

-- a GBP35.0m revolving credit facility

-- an additional GBP16.0m revolving credit facility (the "Top-up facility") in place until 28 February 2013

Pursuant to the amendments, the Company has agreed to pay an amendment fee of GBP2.25m on the earlier of 31 January 2013 and the date of a relevant restructuring, to issue warrants over 5% of the existing issued share capital of the Company at a subscription price of 0.25p per share, subject to standard anti-dilution provisions, which replace the existing contingent obligation to provide warrants to the lenders, and to pay an additional fee - the equity tracker fee - which is payable upon a change of control and that is the economic equivalent of 5% of the enlarged issued share capital of the Company.

It is intended that a restructuring of the Group's balance sheet would take place prior to the end of the current financial year in the interests of the Group and its stakeholders. This restructuring may include the injection of additional equity capital or a change of control (the "Restructuring"). If the Restructuring is achieved by 31 July 2012 then depending on the timing of the Restructuring, either no restructuring fee would be payable or a fee of between GBP1.5m and GBP3.0m would be payable. In the event that a Restructuring is not achieved by 31 July 2012, an amendment fee of GBP8.0m would be payable. Such additional amendment fees shall be payable on the earlier of 31 January 2013 or the date of the relevant Restructuring. Pending the repayment of the Group's borrowing facilities in full, the restriction on dividend payments will remain in place.

The interest margin on the term loan will remain unchanged at 3.85%. The interest margin on the revolving credit facilities will be 6.5% apart from the margin on the Top-up facility which shall be at 10%. The provision that there will be an increase in the interest margin of 2% if an additional voluntary repayment of GBP30.0m has not been made by 31 May 2012 has been removed. Furthermore, the obligatory repayment of GBP7.5m due in 31 July 2012 has been extended to 28 February 2013 when the Top-up facility shall also be repayable.

The Board believes that the facility amendments demonstrate the support of the Banks. The facilities have been constructed to provide the Board with time to right-size the Group balance sheet while providing economic incentives to achieve this right-sizing at the earliest practical opportunity. The amendments provide the Company with critical time to identify and implement value creation initiatives to enhance value. While the Top-up facility is relatively expensive, the Group intends to use it sparingly, if at all but it provides the Group with critical working capital headroom.

The financial covenants applying to the new facility is a test of EBITDA on a quarterly basis until 31 January 2013. Thereafter the covenants revert to those in the facility signed on 26 January 2011.

Loans are repayable as follows:

 
 
                                                    2011    2010 
                                                    GBPm    GBPm 
================================================  ======  ====== 
Obligations due within one year                    135.1     0.7 
Obligations due within one and two years               -     0.1 
Obligations due within two and five years              -   128.7 
================================================  ======  ====== 
Total loans due                                    135.1   129.5 
Loan issue costs incurred                          (4.3)   (4.5) 
Amortisation of loan issue costs                     4.3     1.7 
================================================  ======  ====== 
Total borrowings                                   135.1   126.7 
(Less)/add: Non bank borrowings and issue costs    (0.1)     2.0 
Deduct: cash and cash equivalents (note 15)       (47.3)  (45.4) 
================================================  ======  ====== 
Net bank borrowings                                 87.7    83.3 
================================================  ======  ====== 
 

At 31 July 2010, there were unamortised arrangement fees from the previous facilities of GBP2.8m of which GBP0.6m was amortised during the period to 31 July 2011, as disclosed in note 4, with the balance of GBP2.2m being charged as an exceptional item, as disclosed in note 3.

Loan issue costs of GBP4.3m associated with the new banking facility were capitalised and were being amortised over the life of the loan. The resulting amortisation charge of GBP0.7m was included in finance costs (note 4). As a result of the requirement to disclose the Group's banking facilities as due within one year, the amortisation charge was accelerated and GBP3.6m was included in exceptional finance costs (note 3).

The Group has entered into agreements to partially hedge against the interest rate risk on the revolving credit facility above. The fixed interest rate hedges vary from 3.22% to 5.33% against the floating LIBOR rate. The expiry date of these hedges is between 17 December 2011 and 31 March 2014. At 31 July 2011, the total fair value of derivatives designated as cash flow hedges was a liability of GBP6.4m (2010: liability of GBP7.7m). The whole movement in the fair value is recorded in the Consolidated Statement of Changes in Equity as the hedges are considered highly effective.

At 31 July 2010, there were two secured loans totalling GBP0.8m which were payable in instalments. The first loan on which interest was charged at 6.84% was repaid in December 2010 and the second loan on which interest is charged at 7.44% finishes in October 2011. The balance outstanding at 31 July 2011 on the second loan is GBP0.1m.

13 Provisions for liabilities and charges

 
 
                                              Insurance/ 
                                                  Claims  Dilapidation     Onerous 
                              Restructuring   provisions    provisions   contracts 
                              provisions[1]          (2)           (3)         (4)  Total 
                                       GBPm         GBPm          GBPm        GBPm   GBPm 
===========================  --------------  -----------  ------------  ----------  ----- 
Current                                 0.8            -           0.9         1.6    3.3 
---------------------------  --------------  -----------  ------------  ----------  ----- 
Between one and two years                 -            -           0.4         0.1    0.5 
Between two and five years                -          1.9           0.7           -    2.6 
Over five years                           -            -           1.1           -    1.1 
===========================  ==============  ===========  ============  ==========  ===== 
Non-current                               -          1.9           2.2         0.1    4.2 
===========================  ==============  ===========  ============  ==========  ===== 
At 31 July 2011                         0.8          1.9           3.1         1.7    7.5 

Mouchel (LSE:MCHL)
Gráfica de Acción Histórica
De May 2024 a Jun 2024

Mouchel (LSE:MCHL)
Gráfica de Acción Histórica
De Jun 2023 a Jun 2024