Sports group JJB has amended its banking arrangements, which should give the retailer increased financial flexibility.
Bank of Scotland, JJB Sports’ sole lender, has agreed to change financial covenant tests so that they are based on “current and future trading” rather than on data from 2009/10 as was the case when a deal was struck last year when the retailer was fundraising.
An “EBITDAR test” will replace a fixed charge cover on JJB’s £25m facility for the 2010/11 financial year. The level of EBITDAR will be tested quarterly on a cumulative basis, beginning on April 30.
At the end of the financial year, a fixed charge cover test will be reintroduced, calculated on a rolling 12 months basis and tested every quarter. The cover will rise from 0.8:1 to 1.5:1 over the lifetime of the facility, which runs until 2012.
Changes have also been agreed to JJB’s interest rate covenant ratio, which will move from 7:1 to 4:1 from October 31, following quarterly testing, and to the leverage covenant and margin on its facilities.
JJB will pay a fee of £125,000 to Bank of Scotland for the amendments.