HSS Hire successfully refinances debt

The company has entered into a new term loan facility of £220m and a revolving credit facility of £25m. The new term loan facility will be provided by HPS Investment Partners with £200m maturing in June 2023, and £20m, with flexibility to be settled before maturity, in December 2020. This facility is at interest rates of between 700 and 800 basis points over LIBOR dependent upon the net debt leverage ratio of the group.

In addition, HSS has agreed a new revolving credit facility with HSBC Bank and National Westminster Bank, maturing in December 2022. HSS will pay interest at LIBOR plus 250 to 300 basis points, dependent on leverage.

Chief financial officer Paul Quested said: "We are very pleased to have successfully secured the long-term refinancing of the group. This now ensures that we have the appropriate facilities in place to continue delivering on our strategic priorities and the group's full potential."

Numis pointed out that the new £245m debt facilities are more expensive than those that they replace, and as a result, it has cut its profit forecasts.

The brokerage, which rates the stock at ‘hold’, said its previous estimates assumed net interest charge assumptions of £13.8m, £13.3m and £12.8m in 2018-20. Based on the current LIBOR rate of 0.75%, it calculates that HSS's average cost of debt on its new facilities is around 7.8%, pre debt issue costs.

"Our interest charges rise to £16m in 2018 (6 month impact), £20m in 2019 and £19.5m in 2020. Accordingly our revised profit before tax forecasts are -£2.2m (previously- £0.1m) in 2018, -£1.7m (previously £4.9m) in 2019 and £2.3m (previously £9.1m) in 2020."

At 0920 BST, the shares were down 1.7% to 32.05p.