Enterprise Inns, the debt laden pubs groups, has successfully signed a new £625m borrowing facility, which has prompted a 9% rise in its share price.
The new facility - widely expected to be announced today - will begin in May 2011 when the current arrangement runs out. The group has raised £135m in the half year to the end of March, but its total net debt still stands at around £3.4bn, down from £3.56bn at the start of the year. On the trading front, the company saw half year profits fall from £104m to £86m. The market likes the news, and Enterprise's shares are 11.1p better at 133.2p. Chief executive Ted Tuppen said:
We have a robust balance sheet, and we continue to generate strong operating cash flows, enhanced by our successful programme for disposing of underperforming and non-core pubs. We are pleased to have renewed our bank facility with our existing club of banks on terms which fairly reflect current market conditions.
He said the trading environment would remain challenging in the second half of the year and in a bit of wishful thinking he added:
We sincerely hope the new government will take steps to recognise and support community pubs and their vital role in British society.
I rather think the new government, whoever they may be, will have more pressing concerns when they finally take power.
Back with the trading statement, here's some reaction from analysts. Oriel Securities' Jeffrey Harwood issued a hold note on the business, saying:
The shares have good recovery prospects given the rating of under 5 times earnings.
Meanwhile BC Peel Hunt raised its recommendation from sell to hold:
The refinancing is a significant removal of uncertainty. But we expect to downgrade 2011 estimates on caution for the consumer economy.
