Breath­ing space for Mel­rose af­ter len­ders agree to deal on its debts

The Daily Telegraph - Business - - Business -

◆ Mel­rose In­dus­tries, which bought GKN in a bit­ter £8bn takeover, has done a deal with its len­ders to pro­vide breath­ing space on its debt, writes Alan Tovey.

The com­pany said the new terms gave it “the flex­i­bil­ity it needs to con­tinue to fo­cus on cash gen­er­a­tion and adapt­ing the group to cur­rent mar­ket con­di­tions”.

The FTSE 100 firm has se­cured a fur­ther ex­ten­sion of a waiver on a net debt to earn­ings be­fore in­ter­est, tax, de­pre­ci­a­tion and amor­ti­sa­tion covenant to June 2021.

The ra­tio on net debt to ebitda charges be­fore fi­nanc­ing charges is also be­ing raised from 2.5 times cur­rently to three times un­til Dec 31, even­tu­ally ris­ing to four times through to De­cem­ber 2022.

The changes cover Mel­rose’s pri­mary bor­row­ing ar­range­ments of a £3.2bn re­volv­ing credit fa­cil­ity re­payable in Jan­uary 2023 and a £900m loan that can be ex­tended to April 2024.

The firm’s in­terim div­i­dend is not be­ing paid.

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