ROL.L Regulatory News (ROL)

RNS

15 March 2022

Rotala Plc

("Rotala", the "Company" or the "Group")

New Banking Facilities

The Company is pleased to announce that it has signed a new banking facilities agreement with its principal bankers, HSBC Bank plc. These facilities comprise a Revolving Commercial Facility ("RCF") of up to £17 million and a Mortgage Facility of £5.8 million. The RCF has an initial term of three years, expiring on 14 March 2025, with the option to extend it for up to a further two years. It is currently completely undrawn. The Mortgage Facility commenced in 2017 and was originally for £8.0 million. Since that time, repayments have reduced the amount outstanding to £5.8 million. It remains on a term of up to twenty years expiring in December 2037. In addition, the Company has an overdraft facility of up to £3 million with the same bank. This is ample for the Company's needs and is renewed annually.

The Department for Transport ("DfT") has recently announced the extension of its Bus Recovery Grant ("BRG") scheme, which was originally due to expire in early April 2022, with a further £150 million package under the same scheme covering the period up to October 2022. The Company welcomes this additional funding which reflects the gradual return of the bus industry to normal operating conditions. Rotala's passenger volumes continue to increase steadily and are currently at approximately 80% of their pre-COVID-19 levels. The Board expects passenger volumes will continue to recover and that the new BRG package will aid that recovery.

The DfT is expected soon to announce awards under its Bus Service Improvement Plan scheme, which is part of its National Bus Strategy. The National Bus Strategy envisages that the Government will invest an additional £3 billion in the next few years with the aim of reforming and revitalising bus usage in England. At the same time, the Board believes that, as the bus industry emerges from the protection offered by BRG and its predecessor schemes, and commercial reality returns, opportunities for organic growth and acquisitions are likely to arise once more. Stagecoach Group plc, one of the largest UK bus operators, has attracted competitive bid interest. The Board believes that this transaction could be a precursor of others in the bus industry, at both large and small levels, in the short to medium term.

The Board took the decision to refresh its banking facilities at this time to equip the Company with the resources necessary to take advantage of any suitable opportunities that might arise out of these industry developments. Since the Revolving Commercial Facility is currently undrawn, the Board believes that the Company possesses ample unused facilities to further its ambitions, should the opportunity arise.

About the business 

Rotala provides a range of transport solutions, ranging from local bus services under contract to local authorities, through to commercial bus routes. Rotala has operations at Heathrow Airport, in the West Midlands and in the North West. Operating companies are Diamond Bus Ltd, Diamond Bus (North West) Ltd, Hallmark Connections Ltd and Preston Bus Ltd.