Card Factory PLC Trading Update and Refinancing (3663Z)

TIDMCARD

RNS Number : 3663Z

Card Factory PLC

21 May 2021

21 May 2021

Card Factory plc

(" Card Factory " or the " Company ")

Update on trading post re-opening

Completion of successful refinancing

Card Factory, the UK's leading specialist retailer of greeting cards, dressings and gifts, today announces both an update on trading post the re-opening of non-essential retail and the completion of a GBP225m refinancing with its current banking syndicate.

Trading update

We welcomed our colleagues and customers back into our stores in England and Wales (12 April), Scotland (26 April), Northern Ireland (30 April) and the Republic of Ireland (17 May). Initial store sales performance exceeded both our expectations and the sales performance realised after reopening following the first and second lockdowns. Initial strong demand has been satisfied, with store like-for-like sales for the first 5 weeks marginally down compared to the same period in 2019.

To date, increased spend per transaction has primarily offset the reduced retail footfall: customers are shopping less frequently but buying more. We continue to monitor changes to customer behavior to meet their needs. Our Everyday Card and party ranges have performed strongly, with a clear early trend of customers shopping more evenly during the week.

Sales from the online channels have fallen, as expected, as customers have also been able to shop in our stores, albeit online sales are still exceeding pre-pandemic levels, with performance in line with management expectations.

Refinancing

We have completed a refinancing with our existing commercial banking syndicate. The increased bank facilities of GBP225m provide additional liquidity above the original GBP200m it replaces, and is for the same term through to 24 September 2023 (with provision for a potential extension). As at 16 May 2021, net debt amounted to GBP110m (excluding deferrals of approximately GBP40m, substantially agreed with stakeholders) (16 May 2020 net debt: GBP132.5m). The new facilities comprise:

-- a GBP100m revolving credit facility (RCF), substantially on the same terms as the previous RCF, subject to revised financial covenants, intended to support the business as it returns to normalised leverage;

   --      a GBP75m term loan facility; and 

-- in aggregate, GBP50m Coronavirus Large Business Interruption Loan Scheme (CLBILS) facilities.

The secured facilities provide Card Factory with the necessary financial resources to focus on its future growth strategy. This includes strengthening Card Factory's online customer proposition and the capability and capacity to fulfil sales demand.

The facilities are structured to incentivise an early reduction of overall debt with fees of up to GBP5m payable if pre-payments are not made in line with specified dates from 30 November 2021 through until 30 July 2022. Subject to prevailing market conditions and upon taking independent advice, the Company intends to use its best efforts to raise net equity proceeds of GBP70m to facilitate these prepayments. The Company is also permitted, under the terms of the facilities, to prepay GBP70m using funding from other subordinated sources. In accordance with the terms of the CLBILS facilities, restrictions on payment of dividends will apply whilst the CLBILS facilities remain outstanding. Prepayments shall discharge the Term Loan facility and the CLBILS facilities pro-rata.

The financial covenants incorporated in the facilities provide for (a) total net debt and (b) last 12 months EBITDA, to be tested monthly until March 2022, following which the covenant tests will revert to (i) EBITDA to net debt (leverage) and (ii) EBITDA to interest cover, which are to be tested quarterly. Covenant thresholds are phased to return to 2.5x leverage and 2x interest cover by January 2023.

The Company will release the preliminary results for the financial year ended 31 January 2021 on 8 June 2021.

Darcy Willson-Rymer, Chief Executive, said:

"I am pleased we have secured increased banking facilities, which afford the Group the headroom required to focus on realising the growth strategy. In particular, enhancing our card-led proposition through all sales channels and accelerating the increase in our capability and capacity to fulfil sales demand via our online channel, and so capitalise upon the move to online adopted by more customers over the last year.

"We welcome our colleagues and customers back into our stores, providing the quality ranges at competitive prices which our customers have missed whilst stores were closed. As national restrictions are eased, we continue to prioritise providing a safe working and shopping environment in all our stores. The strong trading performance in our stores over the last few weeks reflects the extensive preparations to maximise meeting our customers' needs completed by the wider Card Factory team."

Enquiries

Card Factory plc via Tulchan Communications (below)

Darcy Willson-Rymer, Chief Executive Officer

Kris Lee, Chief Financial Officer

   Tulchan Communications                                            [phone] 
   James Macey White / Elizabeth Snow                             [e-mail] 

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May 21, 2021 02:00 ET (06:00 GMT)