Dalata agrees amended debt facility, update on pipeline
10 July 2020
Dalata Hotel Group plc has successfully agreed an amendment to the Group's debt Facilities Agreement with its banking partners providing additional financial strength and flexibility as the Company reopens all of its 44 hotels.Amended Debt Facility
The revised Agreement provides additional flexibility to support the Company as the business recovers from the impact of the Covid-19 pandemic. The previous covenants comprising Net Debt to EBITDA and interest cover will not be tested again until June 2022. These two covenants have been replaced, until that date, by a Net Debt to Value covenant and a minimum liquidity test, whereby the Company must have a minimum of €50 million available to it in cash and/or an unutilised amount of the revolving credit facility (RCF). Additionally, the RCF has been increased by €39 million to €364 million until September 2022 as part of the Agreement.
Dalata continues to have significant financial headroom. At the end of June 2020, the Company had cash resources of €103 million and further undrawn committed debt facilities of €72 million. The undrawn committed debt facilities have increased to €111 million as a result of the increase in the RCF.
Dalata's strong balance sheet with comfortable gearing meant it entered the crisis in a very strong financial position. While the business endured significant challenges as a result of the Covid-19 pandemic during the second quarter, the cash utilisation during the quarter was better than initial expectations due to proactive cost control and working capital management, contracted business for essential workers, utilisation of Governments' support initiatives and the postponement of uncommitted capital expenditure. The Company continues to closely monitor spending, preserve cash and maintain a strong liquidity position.
Reopening of Hotels
The Company has now reopened 42 of its hotels in the Republic of Ireland, Northern Ireland and England to the public. Two final hotels, the Clayton Hotel Cardiff and the Maldron Hotel Belfast International Airport are expected to reopen on 11 July and 1 August respectively. Although it is too early to comment on the outlook for the remainder of the year, the pace of bookings over the last week has been encouraging.
Over the past few months, the Company has invested significant time and resources planning for how the hotels can reopen for guests and employees. The introduction of the Dalata Keep Safe Programme across all hotels, comprising advanced sanitisation procedures, new technologies, and effective physical distancing measures, has been well received by our corporate and leisure guests, employees and suppliers.
Pipeline
Government restrictions necessitated the closure of most construction sites during the Covid-19 lockdown. Although all construction sites have since reopened, there will be a delay to the pipeline opening dates. Dalata now expects the Maldron Hotel Glasgow to open towards the end of Q1 2021 and The Samuel in Dublin will follow in mid-2021. The hotels in Manchester (x2), Clayton Hotel Bristol, Clayton Hotel Glasgow and Maldron Hotel Merrion Road in Dublin are now projected to open in Q1 2022. The extension at Clayton Hotel Birmingham will however open earlier than expected in November 2020. The Company does not have firm timelines for the remaining pipeline projects that have not commenced construction and the opening dates for these projects are under review.
Dermot Crowley, Deputy Chief Executive Business Development & Finance said: "We are pleased to have secured amended facilities from our banking group as we reopen for business and begin to welcome customers back to our Clayton, Maldron and partner hotels. Our new covenants will support Dalata as we navigate through these difficult and uncertain times and enhance our strong liquidity position. Throughout the crisis we continued to maintain very strong relationships with our banking partners. Our institutional landlords also continue to actively support Dalata and remain committed to our long-term partnerships.
Since the extent of the pandemic emerged in early March, we have focused on the protection of our people, our business and our cash. We are pleased with how our Dalata team has responded to the significant challenges we faced over the last few months and the progress that we have made on all three focus areas.
We are delighted to be in a position to reopen our hotels to the public. Staying at our hotels may be a little different as we prioritise the safety of guests, employees and suppliers, but through the Dalata Keep Safe Programme, we will continue to strive to provide a relaxing and enjoyable experience for all our guests.
While we are also using this time to work on plans to make our operations more efficient, we remain focused on protecting the business, our people and our financial strength. We are positioning the business for a successful recovery and to look for growth opportunities that may arise out of the crisis. Our key strengths continue to be our asset backed balance sheet and strong liquidity, our experienced management team, our culture and people, and our record of identifying and securing opportunities in a crisis. We will remain very focused and energised in meeting the challenges ahead and exploiting the opportunities that arise".
