Revolution raises credit facility
Revolution Bars has announced that it will increase its revolving credit facility to £30m following an agreement with NatWest.
This will last until 31 August, when it will decrease to £24m as the group “begins to benefit from its normal positive working capital cycle” following the predicted easing of lockdown restrictions.
Following the impact of Covid-19, as of the end of last week (11 April 2020), the group had a net bank debt of £17.8m.
The additional extended facility will now provide additional liquidity, headroom and financial flexibility to support the business through the lockdown.
Having previously suspended covenant tests for the group, NatWest also indicated that it will review both the amount of available facility and the covenant tests applicable from the end of September 2020 “given the prevailing level of uncertainty” amid the ongoing pandemic.
The group recently furloughed 98% of its workforce in light of the crisis. Its CEO, CFO and non-executive directors also agreed to cutting their salaries by 50% in efforts to shore up cash.
As well as keeping costs to a minimum, the group has also renegotiated the completion terms of the transaction to surrender five leases to its landlord Aprirose.
The completion payments have been reduced from £3.64m to £2.25m and deferred payment terms agreed for more than half of the reduced amount, which saved a cash outflow in March of £2.8m.
The group has ultimately reduced its costs to £400k a week.
Rob Pitcher, CEO, said: “Prior to this crisis, we were delivering positive like-for-like sales, had significantly reduced our debt position, were generating strong capex returns, and were on track to meet our full year profit expectations.
“We welcome and are delighted with the additional support from Natwest at this difficult time. They have acted as a true partner to our business and this decisive action has enabled us to be another step closer to being well-positioned to emerge from this crisis.”
He added: “We are also very grateful to those other stakeholders, including our employees, suppliers and certain landlords who have approached this crisis in a similar manner, helping to secure the future of this great business.
“However, there is still more which needs to be done to ensure the protection of the 3.2 million jobs in our sector along with the £39bn of direct tax receipts paid annually to the UK Government.”
He said that this includes more support in connection with property related costs during this enforced closure period and beyond, including support for landlords themselves. Revolution “encourages the UK government to take swift action in this respect”.
The board continues to monitor the group’s funding requirements and all options available to it and will update further when appropriate.
