Financing Arrangements
22 December 2009 - 6:00PM
UK Regulatory
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RNS Number : 5215E
Mavinwood PLC
22 December 2009
Mavinwood plc ("Mavinwood" or the "Company")
Financing Arrangements
The Company announced on 30 September 2009 that the Company's facility agreement
with Lloyds TSB plc ("Lloyds") had been amended such that a minimum equity
injection was required by 31 December 2009 of an amount equal to:
* the existing subordinated working capital facilities of GBP5.1 million entered
into with Geraldton (including rolled-up interest) plus
* the previously announced fee of GBP0.9 million payable to Geraldton in
connection with their equity underwriting commitment.
It has been agreed with Lloyds that this subordinated working capital facility
will remain in place until such time there is an equity injection to replace it.
The Company announced on 29 July 2009 that Geraldton Services, Inc ("Geraldton")
had committed to invest an additional sum of up to GBP4 million before 31
January 2009 if the ratio of net debt to EBITDA on 31 December 2009 as tested
under the Company's facility agreement with Lloyds TSB plc exceeded an agreed
level. This was reiterated in the Company's announcement on 30 September 2009
when Geraldton provided the subordinated working capital facilities to the
Company referred to above.
Mavinwood announces that Geraldton has now entered into a further loan agreement
with Geraldton pursuant to which Geraldton will provide an additional GBP4
million in the form of subordinated working capital facilities at a coupon of
10%. As with the existing Geraldton facilities this facility is due to be repaid
on 1 August 2012 with interest to be compounded annually and paid on the date of
repayment of the loan. Mavinwood has agreed to grant a second charge in respect
of the GBP4 million Geraldton facility ranking behind Lloyds' existing security
and subject to Lloyds' approval. The provision of this facility ensures
compliance with year-end covenants under the terms of the Company's facility
agreement with Lloyds and reflects Geraldton's long-term commitment to the
Company. The previous variation in arrangements with Geraldton, including
Geraldton's obligation to provide a further GBP4 million investment, were
related party transactions and were addressed in the Company's announcements on
29 July 2009 and 30 September 2009.
As part of these arrangements, the Company has agreed with Lloyds that GBP3
million of the GBP9 million Revolving Credit Facility which forms part of the
GBP19.5 million Lloyds facility will be cancelled and that the overdraft
facility will be increased by GBP1 million, resulting in an overall reduction in
the total facility (including the overdraft facility) by GBP2 million to GBP17.5
million. It has further been agreed between Lloyds and the Company that certain
operating costs related to trading in 2009 will be excluded from covenant
calculations. The GBP4 million investment will be used to pay down bank debt.
It remains the Company's intention that all or part of the Geraldton
subordinated working capital facilities will be converted into equity in due
course. The Board is looking at ways to achieve this without incurring excessive
costs.
Current trading
The document storage businesses, Restore and Wansdyke, are performing in line
with management expectations. The document scanning business, Document Control
Services, continues to operate in a difficult market although trading is
improving and the outlook for 2010 is encouraging. Peter Cox, the national
provider of damp and water proofing and timber preservation services, has
continued to experience difficult trading conditions and it is anticipated that
it will report an operating loss for the current financial year. Management
focus is on returning it to former levels of profitability. Ansa Building
Services has ceased to operate and closure costs will be taken in 2009 although
there will be related cash costs in 2010.
Costs across the operating businesses and at head office have been sharply
reduced. All of the costs relating to the previous difficulties of the group are
expected to be accounted for in the current year, but there are ongoing cash
liabilities in respect of vacant properties. The Company continues to enjoy the
ongoing support of Geraldton, its majority shareholder, as reflected in the new
financing arrangements. All four of the Company's operating businesses have
strong market positions and are expected to show improved performance in 2010.
Enquiries
Mavinwood plc
Charles Skinner, Chief Executive07966 234075
Collins Stewart
Adrian Hadden 020 7523 8350
Threadneedle Communications
John Coles020 7653 9848
This information is provided by RNS
The company news service from the London Stock Exchange
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