Staffline Group PLC Completion of Refinancing (2922R)

TIDMSTAF

RNS Number : 2922R

Staffline Group PLC

29 June 2020

29 June 2020

STAFFLINE GROUP PLC

("Staffline", the "Company" or the "Group")

Completion of Refinancing

Staffline, the recruitment and training group, announces that it has agreed a revised financing structure with its lenders.

As previously announced, the Board of Directors has been in constructive discussions with the Group's lenders to amend and partially refinance its financing facilities as well as its covenants package to ensure that the Group is well positioned to support its customers and implement its turnaround programme.

In order to assess the Group's request to amend its financing facilities and covenants package, an independent business review was commissioned by the lenders. Following completion of this review and subsequent negotiations with the Group's lenders, the new financing structure agreed with its lenders includes the following:

 
                                  Previous arrangement   New arrangement 
 Revolving Credit facility              GBP78.2m            GBP30.0m 
  ("RCF") 
                                 ---------------------  ---------------- 
 Overdraft                              GBP25.0m                - 
                                 ---------------------  ---------------- 
 Receivables Finance Facility              -                GBP73.2m 
  ("RFF") (invoice discounting) 
  - maximum 
                                 ---------------------  ---------------- 
 Total Facility                        GBP103.2m            GBP103.2m 
                                 ---------------------  ---------------- 
 Expiry date                          4 July 2022          4 July 2022 
                                 ---------------------  ---------------- 
 

The key terms of the new facilities are set out below, with key other terms of the RCF remaining in place:

i) Repayment and cancellation of RCF commitments by GBP10.0m on 31 July 2020, reducing the RCF to GBP20.0m;

ii) The RFF can initially be drawn down against the receivables of the Recruitment GB division and the Northern Ireland part of the Recruitment Ireland division;

   iii)   Interest on the RFF accruing at 3.50% plus Bank of England base rate; 

iv) Minimum EBITDA and minimum liquidity covenants until a return to leverage and interest cover covenants in January 2022. The minimum EBITDA covenants have been calculated by reference to the Group's downside case;

   v)    Restrictions on new material share, business and asset acquisitions until July 2022; 
   vi)   No dividends to be declared by the Company until July 2022. 

The Group is also funded through customer financing agreements with some of its key customers and an uncommitted (non-recourse) receivables financing facility with a facility limit of GBP25m.

The revised covenant package is more appropriate for the Group's current trading levels.

Liquidity

As previously reported, the Government announced on 20 March 2020 that no VAT payments due from businesses between 20 March 2020 and the end of June 2020 would be required to be made and that these would become payable on or before 31 March 2021. This payment delay provides the Group with an immediate and significant short-term liquidity improvement estimated to be approximately GBP45.0m.

With the VAT deferral and the revised financing structure agreed with its lenders, the Group is well placed to support its customers and implement its turnaround programme.

Based upon a review of the Group's forecasts and associated cash flows for the period ending 31 December 2021, the Group's liquidity forecast (considering its available financing facilities) for this period is sufficient to cover the Group's commitments during that period save for with the exception of a portion of the deferred VAT falling due on or before 31 March 2021. The Directors are working on options to mitigate this liquidity risk, including the implementation of a turnaround plan.

More detail on this liquidity position will be included in the Company's preliminary results for the year ended 31 December 2019, which the Company is now in the process of finalising.

Ian Lawson, Executive Chairman of Staffline, commented:

"We are pleased to have secured the refinancing of Staffline and wish to thank our lenders for their ongoing support. The Group has a solid liquidity position through to March 2021 and this refinancing provides us with the platform to focus on our turnaround plan which includes margin improvement measures, cost reduction initiatives and working capital improvements."

This announcement is released by Staffline Group plc and contains inside information for the purposes of the Market Abuse Regulation (EU) 596/2014 ("MAR") and is disclosed in accordance with the Company's obligations under Article 17 of MAR. The person who arranged for the release of this announcement on behalf of Staffline Group plc was Ian Lawson, Executive Chairman.

For further information, please contact:

 
 Staffline Group plc                           via Vigo Communications 
  www.stafflinegroupplc.co.uk 
  Ian Lawson, Executive Chairman 
  Daniel Quint, Interim Chief Financial 
  Officer 
 
 Liberum NOMAD and Broker 
  www.liberum.com 
  Bidhi Bhoma / Joshua Hughes                  020 3100 2222 
 
 
 Vigo Communications Financial PR              020 7390 0230 
  www.vigocomms.com                             [e-mail] 
  Jeremy Garcia / Antonia Pollock / Charlie 
  Neish 
 

About Staffline - Recruitment, Training and Support

Enabling the Future of Work(TM)

Staffline is the UK's market leading Recruitment and Training group. It has three divisions:

Recruitment GB

Staffline is the UK's leading provider of flexible blue-collar workers, supplying approximately 40,000 staff per day on average to around 450 client sites, across a wide range of industries including agriculture, drinks, driving, food processing, logistics and manufacturing.

Recruitment Ireland

The recruitment Ireland business is a leading end to end solutions provider operating across 20 industries, 10 branch locations, 15 onsite customer locations and offering RPO, MSP, temporary and permanent solutions across the island of Ireland. .

PeoplePlus Division

Staffline is the leading adult skills and training provider in the UK, delivering apprenticeships, adult education, prison education and skills-based employability programmes across the country.

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June 29, 2020 02:00 ET (06:00 GMT)