Chocolatier Thorntons remains confident it will hit its profit targets for the year as it unveils a new refinancing agreement.

Thorntons said it has “secured the continued support of its existing lenders”, who have agreed in principle to provide an increased unsecured committed revolving credit facility of £75m, which will run to October 2018. The retailer said the refinancing will help “support the continuing growth of Thorntons and its transformation into a fast-moving consumer goods company with increasing sales to third-party retailers”.

The retailer’s existing banking facilities, totalling £57.5m, run until October 2015. 

Thorntons said its UK commercial channel had returned to double-digit sales growth in its fourth quarter. It said full year pre-exceptional profit before tax is anticipated to be in line with the market expectation of £7.1m, up from £4.7m last year. Thorntons will update the market on its fourth quarter on July 9.

The retailer admitted that in the “last few years” it had made technical breaches in regards to the amount of money it was permitted to borrow. Thorntons added its lenders “remain supportive of the Company despite these technical breaches”.

Thorntons wants to amend rules to enable it to borrow more, to better reflect the size of the business today. It is currently only able to borrow money based on rules created in 2005 when Thorntons was a smaller company.

Thorntons said: “The Articles currently require the Board to limit the borrowing of the company to a maximum of two-and-a-half times the adjusted capital and reserves (as defined in the Company’s Articles of Association), and these were shown as £16.6m as at the last audited financial statements of the Company.

“The Board consequently will be seeking to increase the limit in the Articles of Association on the Company’s borrowing to the greater of £100m or two-and-a-half times the adjusted capital and reserves.  This will provide for sufficient headroom over its new banking facilities and more appropriately reflect the Company’s cash flow and working capital requirements necessary to support the Company as it continues its transformation.”

Thorntons plans to hold a General Meeting later in July, at which shareholders will be asked to approve a Special Resolution to amend the borrowing limit in the Company’s Articles of Association. 

“The Board believes that it is imperative that the Company’s shareholders vote in favour of the proposed amendment to the Articles,” said Thorntons. “Without such approval the Company is likely to again exceed its current borrowing limit and be in breach of its existing facilities and accordingly would be required to take all possible steps to correct this.”