It’s no secret that HSS Hire have experienced a rocky few years when it comes to profits. Announcing a crippling pre-tax loss of over £80m for 2017, the tool hire firm has had no choice but to make some changes.
In a plea to create some equilibrium in the business, HSS Hire has announced details of a refinancing deal. According to sources, the firm looks to clear out major corporate debt, working with a new term loan facility of £220m.
This will be provided by HPS Investment Partners and aims to inject some stability into the business.
In addition, HSS Hire will also work with a revolving credit facility of £25m.
Paul Quested, chief financial officer at HSS, 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”.
While introduced to manage debt in the business, the interest rates they have signed off on are marginally higher than the previous debt plan. As a result of these new financial structures, the business now forecasts a loss of just £2.2m for this year. This does however differ from an earlier forecast of £0.1m profit.
One broker, Numis Securities, shares their opinion on the new deal.
“The two principal components of HSS’s previous debt structure were a quoted senior secured note of £136mln (with a rate coupon of 6.75%) that matured in 2019, and an RCF [revolving credit facility] of £80mln (on which HSS was latterly paying LIBOR+3%, and was £74mln drawn at 1-April-2018) that expired in July 2019,” Numis said.
“The new RCF, which will mature in December 2022, will be provided by HSBC and National Westminster, and pay interest at LIBOR+ 250-300bp [basis points], dependent on leverage. Management has not disclosed the leverage covenants of the new facilities (net debt/EBITDA was 4.0x in April 2018); however, the new term loan will cover the cost of retiring the SSN [senior secured note], the old RCF facility and the re-financing costs, leaving the new RCF facility undrawn,” the broker added.
Let us know what you think; was this a wise move by HSS Hire?