Mcbride Regulatory News (MCB)

29 September 2022

McBride plc

Amended Financing Agreement

McBride plc (the "Group"), the leading European manufacturer and supplier of private label and contract manufactured products for the domestic household and professional cleaning and hygiene markets, today announces the agreement of amendments to the Group's financing agreements.

In summary, the Group's €175m sustainability-linked revolving credit facility (RCF) remains in place to its original maturity date of May 2026. However, there will be no covenant tests until September 2024, other than a liquidity limit which has been reduced to £15m from the £40m in place since our first covenant waiver in December 2021. As part of this arrangement, the lender group has been granted a security package over assets and investments and there is a modest and progressive step down in the RCF commitment from September 2024. Additionally, the invoice discounting lines, totalling £83m, have been extended and committed to September 2024. More detail on these amendments is set out below.

These financing agreements provide a firm funding platform permitting the Group to further progress its Compass ambitions, as outlined in February 2021. The Group would like to express its thanks for the support that the lender group has given to the Group both through this recent period of uncertainty and in the amendment of our agreements.

The key provisions of the revised agreement are:

€175m sustainability-linked revolving credit facility

· This is reconfirmed to May 2026 (no change from current agreement)

· The RCF is to be secured against material assets, shares and inter-company balances, subject to a mutual agreement to review the continuing requirement for security once the Group is in compliance with the financial covenants below

· Commitments to reduce (and be cancelled) in the amount of the euro equivalent of £2.5m every three months from September 2024 up until the maturity date.

Existing bilateral overdraft facilities with the lender group

· Overdrafts of £5m and €15m shall become ancillary facilities under the RCF, committed until 30 September 2024

Invoice discounting facilities

· Committed to 30 September 2024

Covenants:

· Liquidity

o  shall not be less than £15m on or prior to 30 September 2024

o  shall not be less than £25m post 30 September 2024

· Net debt cover

o  to be tested quarterly from 30 September 2024

o  shall not exceed 3:1 for 30 September 2024 and 31 December 2024

o  shall not exceed 2.75:1 thereafter

· Interest cover

o  to be tested quarterly from 30 September 2024

o  to be no less than 3.4:1 for 30 September 2024

o  to be no less than 3.9:1 for 31 December 2024

o  to be no less than 4:1 for 31 March 2025 and 30 June 2025

o  to be no less than 4.25:1 thereafter

· No dividends will be paid to shareholders until the RCF is refinanced (at maturity or earlier)

Pricing and fees:

· No increase in margin applicable to borrowings when debt cover 2.5x or lower

· When debt cover 2.5x or higher, margin applicable to borrowings rises by 35-235 bps depending on debt cover level

· The arrangement includes an 'upside sharing' mechanism whereby, subject to certain exceptions, a fee will become payable by the Group to members of the lending group upon the occurrence of an exit event (e.g., change of control of the Group or a prepayment or repayment in full of the facility). The fee will equate to 11% of any increase from the current market capitalisation of the Group to the market capitalisation of the Group at the date of the exit event (subject to deductions for any increase to market capitalisation relating to certain share issues).

The Group considers that the arrangement achieves an appropriate balance between the interests of all stakeholders of the Group. In particular, we have been in regular discussion and consultation with the Trustee of the Group's defined benefit pension scheme in the UK. In order to preserve and support the position of the scheme, with the support of the lender group, we have agreed to provide in favour of the scheme a package of additional credit support in the UK, as well as a new information sharing protocol to ensure ongoing communication between the Group and the Trustee remains comprehensive.

Commenting, Mark Strickland, CFO, said:

"This reset of our financing agreements is the culmination of detailed reviews of the business prospects by the Board, its financial advisors and the lender group, and is an excellent outcome following the very difficult trading period over the past 12 to 18 months. It provides the business with funding certainty as our trading prospects recover and we refocus our teams on the improvements anticipated through the Compass strategies."

This announcement contains inside information which is disclosed in accordance with the Market Abuse Regulation which came into effect on 3 July 2016.