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Debenhams refinances to cut interest payments


Leading department store operator Debenhams has today announced a reduction in its interest payments thanks to a new refinancing deal.

The maturity date on its £650 million credit facility has now been extended to October 2015, from October 2013, with an option to add an additional year to the deal.

Along with the extension in tenor, the newly agreed terms mean that the retailer’s interest rate will now be cut by 0.5 per cent to around four per cent with immediate effect.

Debenhams has been producing strong trading results in the face of tough economic conditions in recent months and this move should further consolidate its position.

Commenting on the new deal, Debenhams Finance Director Chris Woodhouse said: “We are delighted to have successfully secured Debenhams’ medium-term funding requirements through this extension, significantly lowering the group’s interest costs in the process.

“Our ability to achieve such a refinancing in the current economic environment is a testament to the continued strong performance of the business.”

In third quarter results published at the end of June, Debenhams like-for-like sales grew 1.5 per cent year-on-year aided by a strong performance in its multichannel platform.

By passing January’s rise in VAT onto customers the retailer has managed to maintain margins, helping to strengthen its cash position.

The updated finance position continues to comprise a £250 million term loan and £400 million revolving credit facility whilst associated refinancing costs of £3.3 million will be amortised over the life of the deal.

Mandated Lead Arrangers and Bookrunners for the deal were Barclays Capital, Lloyds Banking Group and Royal Bank of Scotland.

Published on Monday 18 July by Editorial Assistant

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