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REG - McBride PLC - Amended Financing Agreement

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RNS Number : 1923B  McBride PLC  29 September 2022

29 September 2022

 

McBride plc

 

Amended Financing Agreement

 

McBride plc (the "Group"), the leading European manufacturer and supplier of
private label and contract manufactured products for the domestic household
and professional cleaning and hygiene markets, today announces the agreement
of amendments to the Group's financing agreements.

In summary, the Group's €175m sustainability-linked revolving credit
facility (RCF) remains in place to its original maturity date of May 2026.
However, there will be no covenant tests until September 2024, other than a
liquidity limit which has been reduced to £15m from the £40m in place since
our first covenant waiver in December 2021. As part of this arrangement, the
lender group has been granted a security package over assets and investments
and there is a modest and progressive step down in the RCF commitment from
September 2024. Additionally, the invoice discounting lines, totalling £83m,
have been extended and committed to September 2024. More detail on these
amendments is set out below.

These financing agreements provide a firm funding platform permitting the
Group to further progress its Compass ambitions, as outlined in February 2021.
The Group would like to express its thanks for the support that the lender
group has given to the Group both through this recent period of uncertainty
and in the amendment of our agreements.

The key provisions of the revised agreement are:

€175m sustainability-linked revolving credit facility

·    This is reconfirmed to May 2026 (no change from current agreement)

·    The RCF is to be secured against material assets, shares and
inter-company balances, subject to a mutual agreement to review the continuing
requirement for security once the Group is in compliance with the financial
covenants below

·    Commitments to reduce (and be cancelled) in the amount of the euro
equivalent of £2.5m every three months from September 2024 up until the
maturity date.

Existing bilateral overdraft facilities with the lender group

·    Overdrafts of £5m and €15m shall become ancillary facilities under
the RCF, committed until 30 September 2024

Invoice discounting facilities

·    Committed to 30 September 2024

Covenants:

·    Liquidity

o  shall not be less than £15m on or prior to 30 September 2024

o  shall not be less than £25m post 30 September 2024

·    Net debt cover

o  to be tested quarterly from 30 September 2024

o  shall not exceed 3:1 for 30 September 2024 and 31 December 2024

o  shall not exceed 2.75:1 thereafter

·    Interest cover

o  to be tested quarterly from 30 September 2024

o  to be no less than 3.4:1 for 30 September 2024

o  to be no less than 3.9:1 for 31 December 2024

o  to be no less than 4:1 for 31 March 2025 and 30 June 2025

o  to be no less than 4.25:1 thereafter

·    No dividends will be paid to shareholders until the RCF is refinanced
(at maturity or earlier)

Pricing and fees:

·    No increase in margin applicable to borrowings when debt cover 2.5x
or lower

·    When debt cover 2.5x or higher, margin applicable to borrowings rises
by 35-235 bps depending on debt cover level

·    The arrangement includes an 'upside sharing' mechanism whereby,
subject to certain exceptions, a fee will become payable by the Group to
members of the lending group upon the occurrence of an exit event (e.g.,
change of control of the Group or a prepayment or repayment in full of the
facility). The fee will equate to 11% of any increase from the current market
capitalisation of the Group to the market capitalisation of the Group at the
date of the exit event (subject to deductions for any increase to market
capitalisation relating to certain share issues).

The Group considers that the arrangement achieves an appropriate balance
between the interests of all stakeholders of the Group. In particular, we have
been in regular discussion and consultation with the Trustee of the Group's
defined benefit pension scheme in the UK. In order to preserve and support the
position of the scheme, with the support of the lender group, we have agreed
to provide in favour of the scheme a package of additional credit support in
the UK, as well as a new information sharing protocol to ensure ongoing
communication between the Group and the Trustee remains comprehensive.

 

Commenting, Mark Strickland, CFO, said:

"This reset of our financing agreements is the culmination of detailed reviews
of the business prospects by the Board, its financial advisors and the lender
group, and is an excellent outcome following the very difficult trading period
over the past 12 to 18 months. It provides the business with funding certainty
as our trading prospects recover and we refocus our teams on the improvements
anticipated through the Compass strategies."

 

 For further information, please contact:

 McBride plc
 Chris Smith, Chief Executive Officer      0161 203 7570
 Mark Strickland, Chief Financial Officer  0161 203 7570

 FTI Consulting LLP                        020 3727 1017
 Ed Bridges, Nick Hasell

 

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