JOHNSON Service Group has successfully concluded a refinancing deal with a consortium of banks that provides access to funds up to April, 2013.
The Preston Brook-based company, including its dry cleaning arm headquartered in Prescot, announced that it has struck a £78.5m funding agreement to replace its previous facility that was due to expire on December 31, 2010.
Banks who agreed to the new line of funding include Lloyds Banking Group, The Royal Bank of Scotland, Barclays Bank and Santander, the Spanish owner of the Abbey and Alliance & Leicester banks.
The new terms include a £20m revolving loan and a £5m overdraft facility.
Johnson Service Group will pay fees of 2% in cash at the start of the new facility, in December, 2010.
Financial covenants have been agreed and will be tested quarterly, based on cash flow, interest and gearing covenants.
The group, which comprises dry cleaning, textile hire and facilities management divisions, has continued to reduce its debt over the past year, with net debt falling from £78.5m, in December, 2008, to an anticipated level of below £69m by the end of this year.
The board said it expected net debt to continue to reduce during the coming year.
John Talbot, Johnson Service Group executive chairman, said: “We are delighted to have continued support from our banks.
“We have generated sufficient cash over the last 18 months to significantly reduce the level of facilities required, while maintaining an adequate level of headroom.”
Shares rose 3% following the update, even though analysts said the margin on the new facility was around 1% higher than the current rate.
Robert Morton, of Investec Securities. reduced his profits forecast for next year and 2011 to reflect a £1m-a-year increase in finance charges.
He is now looking for £12.3m in 2010, rising to £13.5m in 2011.
In September, Johnson returned to the black after achieving profits of £5.4m in the six months to June 30, against losses of £7.5m a year ago.
The turnaround was driven by a crackdown on costs, with some of the savings achieved from a reduction in hours for staff at the dry cleaners.
Trading conditions have remained tough for the company, with like-for-like sales in September down 5.3% at Johnsons, and 10.6% at high-end Jeeves of Belgravia.
