After two days of hefty losses in the wake of a £285m debt refinancing last week, TV distributor and film business Entertainment One has regained some of the lost ground.
The company had seen a number of negative comments about the cost of the refinancing from analysts, prompting its shares to lose around a third of their value in just two trading sessions.
But they are currently the biggest riser in the FTSE 250, up 15.1p or nearly 11% to 156p after the Peppa Pig owner issued a statement saying it continued to trade in line with expectations and playing down concerns about the refinancing. It said:
[The refinancing] provides the company with a long term capital structure appropriate for its strategic ambitions. In addition [it] permits greater flexibility by relieving constraints and costs the company historically suffered when undertaking acquisitions and other corporate activity, and allows the company to react swiftly to commercial opportunities.
It said it was confident of doubling the size of the company by 2020 by strong organic growth as well as acquisitions.
Broker Peel Hunt, which on Tuesday cut its rating on the shares from hold to reduce has now issued a buy note. Analyst Malcolm Morgan said:
In response to the share price fall Entertainment One has this morning reiterated the detail of the refinancing. The flexibility of the covenant-light loan is being paid for by sharply higher interest cost. We leave our target price unchanged but expect the share price to rise after the aggressive falls that have happened as the market digested another earnings per share reduction so soon after the interims and the dilutive rights issue.
The recovery may have been helped by news that chief executive Darren Throop bought 130,675 shares on Tuesday at 140.37p each.
