// Homebase repaid its £132m loan to owner Hilco shortly after receiving millions from the government in Covid support
// The home improvement retailer collected £40m in business rates relief and furlough money
Homebase owner Hilco received a payout of £132m shortly after the retailer collected millions from the government’s Covid-support scheme.
The home improvement retailer repaid a long-term loan to its parent company in January 2022, according to its latest annual accounts.
The repayment came shortly after Homebase received £40m in business rates relief and furlough money, as well as after it had negotiated a three-year extension on its £95m loan.
However, Hilco was forced to provide £45m of fresh funding within months of receiving its payout as the retailer had breached covenants of its Wells Fargo loan agreement.
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Homebase profits plummeted 56% to £30m in the year to 26 December 2021 due to “subdued demand” and zero sales growth, which its bosses warned was to continue in the current financial year.
The accounts show Hilco provided auditors with a “letter of comfort” that they would supply further funds if needed for the retailer to be signed off as a going concern – meaning it was able to continue trading for the period to 30 June 2024.
“Whilst the cost-of-living crisis continues to be an ongoing challenge across the UK and Ireland, the director believes the business remains resilient and well placed to manage the Homebase Group’s working capital and funding needs,” the retailer said.
Last month, Homebase predicted a strong summer after it hit record sales over the Bank Holiday weekend thanks to the warmer weather.
Chief executive Damian McGloughlin said: “After a tough winter and a slow start to spring, we’re now seeing strong performance and we’re confident the market is headed in the right direction.
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