LONDON, July 19 (Reuters) – Debenhams (DEB.L), Britain’s No.2 department stores group, has completed a refinancing of its debts, signing a new 650 million pound ($997 million)agreement that will cut its interest bill, it said on Monday.
The group said the deal comprised a 250 million pound term loan and a 400 million pound revolving credit facility expiring in October 2013, with an option to extend to October 2014.
After hedging a proportion of the debt into fixed rates, it expects interest costs net of fees to fall from about 7 percent this financial year to about 4.5 percent during the first full year of the agreement.
“The new facility puts Debenhams on a strong footing for the future, extending the group’s debt maturity horizon beyond three years and, in combination with related hedging, significantly reducing the group’s interest charge for the future,” said finance director Chris Woodhouse.
“Debenhams continues to be a highly cash generative and profitable business and we expect to continue our programme of net debt reduction over the coming years.”
The agreement will start in April 2011 on the expiry of the existing bank facility. Associated refinancing costs of around 10 million pounds will be capitalised and amortised over the life of the new agreement, Debenhams said.
It added that the facility was oversubscribed.
The mandated lead arrangers and bookrunners for the deal were Barclays Capital (BARC.L), Lloyds Banking Group (LLOY.L) and Royal Bank of Scotland (RBS.L). (Reporting by Mark Potter; Editing by Hans Peters) ($1=.6519 Pound)