LONDON (ShareCast) - (Sharecast News) - InterContinental Hotels Group said on Friday that it had reached agreement for further amendments to its revolving credit facility.
The FTSE 100 accommodation operator said that included an additional waiver of the covenants at 31 December 2021, together with a relaxation to the covenants at 30 June 2022 and 31 December 2022.

It said the leverage ratio covenant had been amended to require net debt-to-EBITDA of less than 7.5:1 at 30 June 2022 and less than 6.5:1 at 31 December 2022.

The interest cover covenant was amended to require a ratio of above 1.5:1 at 30 June 2022 and above 2.0:1 at 31 December 2022.

IHG said the covenant relaxations were based on a theoretical severe downside scenario.

The minimum liquidity covenant of $400m would continue while the amendments were in place, and would be tested on 31 December 2021, 30 June 2022 and 31 December 2022.

"As [we] announced in April, we amended our existing $1.35bn syndicated and bilateral revolving credit facilities to include a waiver of existing covenants at 30 June 2020, 31 December 2020 and 30 June 2021," the board said in its statement.

At that time, the interest cover and leverage ratio covenants were replaced by a $400m minimum liquidity covenant, while the maturity of the revolving credit facility was extended by 18 months to September 2023.

Additionally, ahead of its results for the 2020 financial year, IHG announced some changes, confirming that revenue arising from the licensing of intellectual property under co-brand credit card agreements in its reportable segments would be recognised within central revenue, rather than in the system fund.

"As only the proportion of revenue associated with IHG's intellectual property will move, the vast majority of revenue associated with the cobrand portfolio will continue to be recognised in the system fund," the board said.

It said it would also recognise the revenue, costs and profit of running the Ambassador loyalty programme in the system fund, rather than its reportable segments, with the changes effective from 1 January 2020, with amounts recognised in prior years unchanged.

"The net effect of the changes, if these had been effective in 2019, would have been an increase in IHG's revenue and operating profit from reportable segments of $18m and $22m respectively, with a corresponding reduction in system fund revenue and increase in the system fund in-year deficit.

"A broadly similar impact is anticipated for the 2020 financial year."

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