Shares of Manchester-based Revolution Bars Group plc rose more than 40% on Tuesday after it published a “COVID-19 and banking facilities update” showing NatWest agreed to increase the firm’s revolving credit facility to £30 million until August 31, 2020.
Revolution also said it renegotiated the completion terms of a transaction to surrender five leases to its landlord Aprirose.
“The completion payments have been reduced from £3.64m to £2.25m and deferred payment terms agreed for more than half of the reduced amount, which saved a cash outflow in March of £2.8m (includes VAT),” said Revolution, which has furloughed 2,775 staff — about 98% of its workforce.
Revolution shares rose 42% to around 22p. The firm’s shares were trading around 90p in January.
The salaries of Revolution’s CEO, CFO and non-executive directors have been reduced by 50% and the firm is “implementing significant salary reductions for senior employees remaining in work.”
Other cost saving measures have included receiving government-backed 12-month business rates relief; deferral of PAYE and VAT payments from March 18, 2020 for three month; assistance from suppliers on contract suspensions and extended credit and payment terms; and negotiations with landlords on rent relief.
“These measures have significantly reduced the group’s weekly running costs to approximately £0.4m per week and management continues to seek further cost reduction opportunities,” said the firm.
On its debt facility, Revolution said: “As previously announced on 18 March 2020, the board has been exploring all funding options available to the group.
“This has included discussions with its lending bank, Natwest.
“The group’s revolving credit facility runs to December 2021 and currently is for £21.0m but due to step down to £18.0m at the end of June 2020 consistent with the group’s strategy and successful execution of reducing debt.
“Following the impact of COVID-19, as at the end of last week (11 April 2020), the group had net bank debt of £17.8m.
“The board is pleased to announce that, subject to final documentation, Natwest has agreed to increase the facility to £30.0m until 31 August 2020, following which it will step down to £24.0m as the group begins to benefit from its normal positive working capital cycle following an assumed recommencement of trade in July 2020.
“Natwest has also agreed to waive all financial covenant tests at March and June.
“Given the prevailing level of uncertainty regarding both the timing of being able to reopen the group’s bars and the trading environment in the post COVID-19 period, Natwest has indicated it will review both the amount of available facility and the covenant tests applicable from the end of September 2020 by reference to the group’s updated trading forecasts closer to that date, however, as demonstrated by the agreed increase in the facility, they remain supportive of the group.
“The additional facility, agreed on normal commercial terms, will provide additional liquidity, headroom and financial flexibility to support the business through these challenging times.
“The board continues to monitor the group’s funding requirements and all options available to it and will update further when appropriate.”
Revolution Bars Group CEO Rob Pitcher said: “Prior to this crisis, we were delivering positive like-for-like sales, had significantly reduced our debt position, were generating strong capex returns, and were on track to meet our full year profit expectations.
“We welcome and are delighted with the additional support from Natwest at this difficult time.
“They have acted as a true partner to our business and this decisive action has enabled us to be another step closer to being well-positioned to emerge from this crisis.
“We are also very grateful to those other stakeholders, including our employees, suppliers and certain landlords who have approached this crisis in a similar manner, helping to secure the future of this great business.
“However, there is still more which needs to be done to ensure the protection of the 3.2 million jobs in our sector along with the £39 billion of direct tax receipts paid annually to the UK Government.
“Specifically, this includes more support in connection with property related costs during this enforced closure period and beyond, including support for landlords themselves and we encourage the UK Government to take swift action in this respect.”