Financing Arrangements

 

TIDMMVW 
 
RNS Number : 5215E 
Mavinwood PLC 
22 December 2009 
 

 
 
Mavinwood plc ("Mavinwood" or the "Company") 
 
 
Financing Arrangements 
 
 
The Company announced on 30 September 2009 that the Company's facility agreement 
with Lloyds TSB plc ("Lloyds") had been amended such that a minimum equity 
injection was required by 31 December 2009 of an amount equal to: 
  *  the existing subordinated working capital facilities of GBP5.1 million entered 
  into with Geraldton  (including rolled-up interest) plus 
  *  the previously announced fee of GBP0.9 million payable to Geraldton in 
  connection with their equity underwriting commitment. 
 
 
 
It has been agreed with Lloyds that this subordinated working capital facility 
will remain in place until such time there is an equity injection to replace it. 
The Company announced on 29 July 2009 that Geraldton Services, Inc ("Geraldton") 
had committed to invest an additional sum of up to GBP4 million before 31 
January 2009 if the ratio of net debt to EBITDA on 31 December 2009 as tested 
under the Company's facility agreement with Lloyds TSB plc exceeded an agreed 
level. This was reiterated in the Company's announcement on 30 September 2009 
when Geraldton provided the subordinated working capital facilities to the 
Company referred to above. 
Mavinwood announces that Geraldton has now entered into a further loan agreement 
with Geraldton pursuant to which Geraldton will provide an additional GBP4 
million in the form of subordinated working capital facilities at a coupon of 
10%. As with the existing Geraldton facilities this facility is due to be repaid 
on 1 August 2012 with interest to be compounded annually and paid on the date of 
repayment of the loan. Mavinwood has agreed to grant a second charge in respect 
of the GBP4 million Geraldton facility ranking behind Lloyds' existing security 
and subject to Lloyds' approval. The provision of this facility ensures 
compliance with year-end covenants under the terms of the Company's facility 
agreement with Lloyds and reflects Geraldton's long-term commitment to the 
Company. The previous variation in arrangements with Geraldton, including 
Geraldton's obligation to provide a further GBP4 million investment, were 
related party transactions and were addressed in the Company's announcements on 
29 July 2009 and 30 September 2009. 
As part of these arrangements, the Company has agreed with Lloyds that GBP3 
million of the GBP9 million Revolving Credit Facility which forms part of the 
GBP19.5 million Lloyds facility will be cancelled and that the overdraft 
facility will be increased by GBP1 million, resulting in an overall reduction in 
the total facility (including the overdraft facility) by GBP2 million to GBP17.5 
million. It has further been agreed between Lloyds and the Company that certain 
operating costs related to trading in 2009 will be excluded from covenant 
calculations. The GBP4 million investment will be used to pay down bank debt. 
It remains the Company's intention that all or part of the Geraldton 
subordinated working capital facilities will be converted into equity in due 
course. The Board is looking at ways to achieve this without incurring excessive 
costs. 
 
 
Current trading 
The document storage businesses, Restore and Wansdyke, are performing in line 
with management expectations. The document scanning business, Document Control 
Services, continues to operate in a difficult market although trading is 
improving and the outlook for 2010 is encouraging. Peter Cox, the national 
provider of damp and water proofing and timber preservation services, has 
continued to experience difficult trading conditions and it is anticipated that 
it will report an operating loss for the current financial year. Management 
focus is on returning it to former levels of profitability. Ansa Building 
Services has ceased to operate and closure costs will be taken in 2009 although 
there will be related cash costs in 2010. 
Costs across the operating businesses and at head office have been sharply 
reduced. All of the costs relating to the previous difficulties of the group are 
expected to be accounted for in the current year, but there are ongoing cash 
liabilities in respect of vacant properties. The Company continues to enjoy the 
ongoing support of Geraldton, its majority shareholder, as reflected in the new 
financing arrangements. All four of the Company's operating businesses have 
strong market positions and are expected to show improved performance in 2010. 
 
 
Enquiries 
 
 
Mavinwood plc 
Charles Skinner, Chief Executive07966 234075 
 
 
Collins Stewart 
Adrian Hadden 020 7523 8350 
 
 
Threadneedle Communications 
John Coles020 7653 9848 
 
 
 
This information is provided by RNS 
            The company news service from the London Stock Exchange 
   END 
 
 MSCBFLLLKLBBFBQ