REG - Staffline Group PLC - Completion of Refinancing

StafflineAnnouncement

29/06/2020 07:00

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RNS Number : 2922R  Staffline Group PLC  29 June 2020

29 June 2020

 

STAFFLINE GROUP PLC

("Staffline", the "Company" or the "Group")

 

Completion of Refinancing

 

Staffline, the recruitment and training group, announces that it has agreed a
revised financing structure with its lenders.

 

As previously announced, the Board of Directors has been in constructive
discussions with the Group's lenders to amend and partially refinance its
financing facilities as well as its covenants package to ensure that the Group
is well positioned to support its customers and implement its turnaround
programme.

 

In order to assess the Group's request to amend its financing facilities and
covenants package, an independent business review was commissioned by the
lenders. Following completion of this review and subsequent negotiations with
the Group's lenders, the new financing structure agreed with its lenders
includes the following:

 

                                                                       Previous arrangement  New arrangement
 Revolving Credit facility ("RCF")                                     £78.2m                £30.0m
 Overdraft                                                             £25.0m                -
 Receivables Finance Facility ("RFF") (invoice discounting) - maximum  -                     £73.2m
 Total Facility                                                        £103.2m               £103.2m
 Expiry date                                                           4 July 2022           4 July 2022

 

The key terms of the new facilities are set out below, with key other terms of
the RCF remaining in place:

i)     Repayment and cancellation of RCF commitments by £10.0m on 31 July
2020, reducing the RCF to £20.0m;

ii)    The RFF can initially be drawn down against the receivables of the
Recruitment GB division and the Northern Ireland part of the Recruitment
Ireland division;

iii)   Interest on the RFF accruing at 3.50% plus Bank of England base rate;

iv)   Minimum EBITDA and minimum liquidity covenants until a return to
leverage and interest cover covenants in January 2022. The minimum EBITDA
covenants have been calculated by reference to the Group's downside case;

v)    Restrictions on new material share, business and asset acquisitions
until July 2022;

vi)   No dividends to be declared by the Company until July 2022.

 

The Group is also funded through customer financing agreements with some of
its key customers and an uncommitted (non-recourse) receivables financing
facility with a facility limit of £25m.

 

The revised covenant package is more appropriate for the Group's current
trading levels.

 

Liquidity

 

As previously reported, the Government announced on 20 March 2020 that no VAT
payments due from businesses between 20 March 2020 and the end of June 2020
would be required to be made and that these would become payable on or before
31 March 2021. This payment delay provides the Group with an immediate and
significant short-term liquidity improvement estimated to be approximately
£45.0m.

 

With the VAT deferral and the revised financing structure agreed with its
lenders, the Group is well placed to support its customers and implement its
turnaround programme.

 

Based upon a review of the Group's forecasts and associated cash flows for the
period ending 31 December 2021, the Group's liquidity forecast (considering
its available financing facilities) for this period is sufficient to cover the
Group's commitments during that period save for with the exception of a
portion of the deferred VAT falling due on or before 31 March 2021. The
Directors are working on options to mitigate this liquidity risk, including
the implementation of a turnaround plan.

 

More detail on this liquidity position will be included in the Company's
preliminary results for the year ended 31 December 2019, which the Company is
now in the process of finalising.

 

Ian Lawson, Executive Chairman of Staffline, commented:

 

"We are pleased to have secured the refinancing of Staffline and wish to thank
our lenders for their ongoing support. The Group has a solid liquidity
position through to March 2021 and this refinancing provides us with the
platform to focus on our turnaround plan which includes margin improvement
measures, cost reduction initiatives and working capital improvements."

 

This announcement is released by Staffline Group plc and contains inside
information for the purposes of the Market Abuse Regulation (EU) 596/2014
("MAR") and is disclosed in accordance with the Company's obligations under
Article 17 of MAR. The person who arranged for the release of this
announcement on behalf of Staffline Group plc was Ian Lawson, Executive
Chairman.

 

 

For further information, please contact:

 

 Staffline Group plc                                                via Vigo Communications

 www.stafflinegroupplc.co.uk (http://www.stafflinegroupplc.co.uk)

 Ian Lawson, Executive Chairman

 Daniel Quint, Interim Chief Financial Officer

 Liberum NOMAD and Broker                                           020 3100 2222

 www.liberum.com (http://www.liberum.com)

 Bidhi Bhoma / Joshua Hughes

 Vigo Communications Financial PR                                   020 7390 0230

 www.vigocomms.com (http://www.vigocomms.com)                       staffline@vigocomms.com (mailto:staffline@vigocomms.com)

 Jeremy Garcia / Antonia Pollock / Charlie Neish

 

 

About Staffline - Recruitment, Training and Support

 

Enabling the Future of Work™

Staffline is the UK's market leading Recruitment and Training group. It has
three divisions:

 

Recruitment GB

Staffline is the UK's leading provider of flexible blue-collar workers,
supplying approximately 40,000 staff per day on average to around 450 client
sites, across a wide range of industries including agriculture, drinks,
driving, food processing, logistics and manufacturing.

 

Recruitment Ireland

The recruitment Ireland business is a leading end to end solutions provider
operating across 20 industries, 10 branch locations, 15 onsite customer
locations and offering RPO, MSP, temporary and permanent solutions across the
island of Ireland. .

 

PeoplePlus Division

Staffline is the leading adult skills and training provider in the UK,
delivering apprenticeships, adult education, prison education and skills-based
employability programmes across the country.

 

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