Dalata Hotel Group has announced that it has successfully agreed an amendment to its debt facilities agreement with its banking partners, providing additional financial strength and flexibility as the group reopens its 44 hotels.
The revised agreement provides additional flexibility to support Dalata as the business recovers from the impact of the COVID-19 pandemic. The previous covenants comprising net debt to earnings before interest, taxes, depreciation and amortisation (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 Dalata 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 stated that it continues to have significant financial headroom, having had cash resources of €103 million and further undrawn committed debt facilities of €72 million at the end of June. The undrawn committed debt facilities have increased to €111 million as a result of the increase in the RCF.
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The group said that its strong balance sheet with comfortable gearing meant that it entered the COVID-19 crisis in a very strong financial position, and, while it has endured significant challenges as a result of the crisis 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 government support initiatives and the postponement of uncommitted capital expenditure.
Dalata said that it is continuing to closely monitor spending, preserve cash and maintain a strong liquidity position.
Reopening Of Hotels And Developments Pipeline
Dalata has now reopened 42 of its hotels in the Republic of Ireland, Northern Ireland and England, and its Clayton Hotel Cardiff and the Maldron Hotel Belfast International Airport venues are expected to reopen on July 11 and August 1, respectively.
The group also noted that there will be a delay to the planned opening dates of hotels in its developments pipeline. it now expects that the Maldron Hotel Glasgow will open towards the end of Q1 2021 and that The Samuel in Dublin will follow in mid-2021. Additionally, two hotels in Manchester, the Clayton Hotel Bristol, the Clayton Hotel Glasgow and the 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.
Dalata does not currently have firm timelines for the remaining pipeline projects that have not commenced construction, and the opening dates for these projects are under review.
Dalata's deputy chief executive of business development and finance, Dermot Crowley, commented, "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."
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