LONDON (Alliance News) - Bagir Group Ltd shares rose on Monday after successfully amending its debt repayment schedule with its banks, which have also agreed to waive the testing of the company's financial covenants until the second half of 2016.
Bagir shares were trading up 31% to 4.93 pence per share on Monday morning.
Leumi Bank and Discount Bank have agreed to amend the tailor's repayment schedule, which will see the company pay back its USD11.2 million loan back over the next five years rather than the next two years.
Originally, Bagir was set to repay USD2.7 million in 2016 and then make two payments in 2017 of USD4.0 million and USD4.5 million respectively.
Under the new terms Bagir will only repay USD465,000 in 2016 and USD750,000 in 2017, with further payments of USD1.0 million and USD1.7 million in 2018 and 2019 respectively, with two final payments in 2020 of USD2.3 million and USD5.0 million.
The banks have also agreed to a waiver of the testing of company's financial covenants for December 31, 2015, and June 30, 2016.
"The waiver of the testing of the covenants is of immediate importance but of equal, if not more, significance is that we have secured their agreement to a three year extension of the repayment terms of the loans and the reclassification of the previous short-term revolving 12 month loan to a long-term facility," said Chief Executive Eran Itzhak.
Following the waivers, the covenants will be tested every six months, but Bagir Group said a revised set of covenants have been agreed on "more favourable terms" to the company than previously agreed.
Itzhak joined Bagir back in 2011 but took up the role of CEO back in November after being promoted from his role as vice-president of business development and innovation. Itzhak replaced Danny Taragan, who left Bagir to pursue other business interests.
Bagir is focused on rebuilding the company following on from its poor results since 2014. Itzhak will be spearheading the ongoing restructuring which was originally launched at the end of the 2014 financial year when Bagir saw its revenue decline and margins shrink, leading to a wider pretax loss.
More recently, Bagir reported a widener USD3.2 million pretax loss in the first half of 2015 as revenue fell to USD45.5 million from USD48.0 million a year earlier alongside its gross margin being squeezed by the competitive markets. Investors will eagerly await the company's full year results as Bagir had already warned the second half of 2015 would be tougher than the first.
In anticipation of the more difficult second half, Bagir expanded its restructuring programme to focus its core business on higher-valued-added products offering better margins.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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