Speedy amends credit line and reduces costs
By Patrick Hill09 April 2009
Speedy Hire in the UK has amended its banking facility to obtain a £300 million line of credit through June 2012. The revised agreement followed a review of the company's business, plans and financial projections.
The Merseyside-based company said the facility "...provides for prudent levels of headroom" between outstanding debt and the facility's cap. Tests for compliance with interest cover, cash flow, and leverage covenants of the agreement also allow sufficient flexibility, said Speedy.
The company said it is "...confident that the revised covenants are appropriate for current market conditions and the Group's trading outlook over the term of the facility. Speedy Hire retains the flexibility to set dividend and bonus payments and manage capex in line with business needs. Combined with the three-year term of the facility, this will allow the Group both to focus on managing the business through the downturn and to capitalise on any potential upturn."
Speedy said it is continuing to reduce costs to "...position itself for continued weakness in the new financial year [that began 1 April]." Since July 2008, it has reduced staff by 957 (17%), depots by 82 (17%), and its vehicle fleet by 470 (15%). Anticipated annual benefits of £42 million are a result of all cost reduction activities.
Its second-half capital expenditures of £22 million were approximately 60% less than in the first half, and the company expects a similar rate during the next financial year. It has reduced rental assets by approximately £30 million (9%) over the past six months.
Speedy continues to win new business, such as being part of a consortium to build London's Olympic Park (see related story). Also, it signed a sole-supplier agreement with Southern Electric Contracting, a major mechanical and electrical contractor, and renewed a contract with SembCorp, an industrial utilities and services company.