Debenhams in debt refinancing deal
DEBENHAMS has sealed a new deal to refinance its debts, signing a new £650m ($997M) agreement that will cut its interest bill.
The deal includes a £250m loan and a £400m revolving credit facility expiring in October 2013, with an option to extend to October 2014.
It expects interest costs net of fees to fall from about seven per cent this financial year to about 4.5 per cent during the first full year of the agreement.
Finance director Chris Woodhouse said: “The new facility puts Debenhams on a strong footing for the future, extending the group’s debt maturity horizon beyond three years and, in combination with related hedging, significantly reducing the group’s interest charge for the future.
“Debenhams continues to be a highly cash generative and profitable business and we expect to continue our programme of net debt reduction over the coming years.”
The agreement will start in April 2011 on the expiry of the existing bank facility. Associated refinancing costs of around £10m will be capitalised and amortised over the life of the new agreement, Debenhams said.