GVC Holdings has agreed terms on a new revolving credit facility (RCF) worth £535m (€614.4m/$668.3m) as part of its strategy to mitigate the impact of the novel coronavirus (Covid-19) on its business.
Agreed with existing lending banks, the facility will run on substantially the same terms as its previous RCF – which has now been cancelled – apart from a revised covenant limit.
The covenant of net debt and earnings before interest, tax, depreciation and amortisation (EBITDA) will be measured on a trailing 12-month pre IFRS-16 basis, only if the facility is drawn by more than 35% at a quarter-end.
For the quarter-ends, up to and including 30 September 2021, the covenant limit will be no more than six times the net debt/EBITDA, after which the limit will return to four times.
The facility is currently undrawn and, according to GVC, it is in a robust financial position, with accessible cash of over £350m at 31 March. Of this amount, more than £250m is cash at hand after excluding cash in shops, ring-fenced PSP funds and other items that may not be immediately available.
“Having taken early and decisive actions to mitigate the impact of Covid-19 on our business, we are confident that we can achieve our target of breakeven cashflow per month during this crisis,” GVC chief financial officer Rob Wood said.
“I am delighted that we have reached agreement with our key lending banks on this revised RCF, which will provide us with further financial flexibility to continue on our path of excellent growth momentum.
“We remain well placed to take advantage of a range of attractive growth opportunities which we believe will be available to us.”
Earlier this month, GVC said the cancellation and postponement of many major sports events around the world as a result of the coronavirus would, before any mitigating actions, reduce its EBITDA £50m per month. However, this was lower than the £100m per month GVC had initially forecast.
GVC also said that as a result of this decline, average monthly cash outflow would be limited to around £15m, with the group adding it is confident further cost actions will enable it to achieve its target of reducing cashflow to break-even.
Such mitigations include GVC taking advantage of the UK government scheme to award grants to business to help with employment costs, with GVC having place retail staff on furlough and on full pay.