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LONDON (Alliance News) - Accrol Group Holdings PLC on Tuesday said its lenders have waived earnings covenant tests, while also delaying the reduction in its revolving credit facility limit.
The stock was up 13% on Tuesday at 18.40 pence per share. It had reached a high of 165.00p in May last year before plummeting in early October following a profit warning.
The soft tissue products firm then in March said it expected a significant swing to a loss in its financial year which ended Monday, adding it was likely to breach one of its banking covenants.
Accrol has been hit by issues such as increased internal and input costs as well as adverse foreign exchange hedging.
It said Tuesday the earnings before interest, tax, depreciation, and amortisation covenants for its year ended April and quarter ending July have been waived.
Further, a scheduled reduction in the limit of its revolving credit facility which was meant to occur Monday has been pushed back to the end of October.
These arrangements, Accrol said, which are conditional on the company complying with "certain undertakings" to the lender during May, will help it pursue its business recovery plan.
On an operational note, Accrol said it has established indicative terms for the lease funding for a new conversional line at its Leyland plant in the next three months to help it fulfil recent "major" business wins.
It also has agreed heads of terms on the exit from its onerous distribution hub in Skelmersdale. As previously announced, this should help annualised profit by at least GBP5.0 million.
Trading, Accrol added Tuesday, is continuing to meet market expectations.