Card Factory announced earlier on Thursday that it has successfully completed a refinancing which removed a commitment to raise funds, leading to the 28% jump in the UK’s largest specialised retailer of greeting cards’ shares to 57p.
Card Factory has reached an agreement with its current banking syndicate on refinancing conditions. The company has made considerable progress in reducing overall debt by utilising its positive cash flows.
Card Factory’s group net debt excluding lease liabilities was £79m as of 31 March 2022.
Card Factory’s results of the revised facilities include a £100m revolving credit facility (RCF), available through September 2025, on virtually the same terms as the previous RCF, subject to enhanced financial restrictions.
The conditions of the revised facility for Card Factory also entail an £11.25m term loan facility that will be repaid between January 31, 2023, and January 31, 2024, and an £18.75m term loan facility that will be repaid in six £1.75 million quarterly instalments starting in April 2024 and ending with a final repayment of the balance amount in September 2025
As a result, revised agreements on decreased facilities of £150m which was originally £225m, have been reached by the company. Card Factory will cut its government-backed Coronavirus Large Business Interruption Loan Scheme (CLBILS) component from £50m to £20m because of the revised agreements which are due for repayment in September 2023.
Dividend restrictions will remain in place until the CLBILS facilities and the GBP11.25m term loan are paid off, which is due in January 2024, if the leverage ratio stays below 1.5 times.
The revised facilities have withdrawn Card Factory’s best efforts commitment to its banks to obtain net equity proceeds of £70 million by 30 July 2022. The Board has no plans to complete an equity raising at this time said the company.
Card Factory’s preliminary results for the financial year ended 31 January 2022 will be released in May 2022.
Darcy Willson-Rymer, Card Factory CEO said, “I am pleased to be able to announce the successful completion of Card Factory’s refinancing today.”
“This is an important milestone for our business, ensuring we have the financial foundations in place to capitalise on the opportunities ahead.”
“We are now well positioned to continue our strategic transition from a store-led card retailer to a market leading omnichannel retailer of cards and gifts. I look forward to updating you on our progress at our full year results next month.”
