LONDON (ShareCast) - (Sharecast News) - Dalata Hotel Group has agreed an amendment to its debt facilities agreement with its banking partners, it announced on Friday, providing "additional financial strength and flexibility" as it reopens all of its 44 hotels.
The AIM-traded firm said the previous covenants comprising net debt-to-EBITDA and interest cover would not be tested again until June 2022.

Those two covenants were replaced, until that date, by a net debt-to-value covenant and a minimum liquidity test, whereby the company must have a minimum of €50m (£44.77m) available to it in cash, or an unutilised amount of the revolving credit facility.

Additionally, the revolving credit facility was increased by €39m to €364m until September 2022, as part of the agreement.

Dalata said it still had "significant" financial headroom, reporting that at the end of June, it had cash resources of €103m and further undrawn committed debt facilities of €72m.

The undrawn committed debt facilities were increased to €111m as a result of the increase in the revolving credit facility.

It said its "strong" balance sheet, with "comfortable" gearing, meant it entered the crisis in a "very strong" financial position.

"While the business endured significant challenges as a result of the Covid-19 pandemic 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 governments' support initiatives and the postponement of uncommitted capital expenditure," the board said in its statement.

"The company continues to closely monitor spending, preserve cash and maintain a strong liquidity position."

Dalata said it had now reopened 42 of its hotels in the Republic of Ireland, Northern Ireland and England to the public.

Two final hotels - the Clayton Hotel Cardiff and the Maldron Hotel Belfast International Airport - were expected to reopen on 11 July and 1 August, respectively.

The board said that, although it was too early to comment on the outlook for the rest of the year, the pace of bookings in the last week had been "encouraging".

"Over the past few months, the Company has invested significant time and resources planning for how the hotels can reopen for guests and employees.

"The introduction of the Dalata Keep Safe Programme across all hotels, comprising advanced sanitation procedures, new technologies, and effective physical distancing measures, has been well received by our corporate and leisure guests, employees and suppliers."

Looking at its pipeline, Dalata said government restrictions required the closure of most construction sites during the Covid-19 lockdown.

Although all construction sites had since reopened, it said there would be a delay to the pipeline opening dates.

Dalata now expected the Maldron Hotel Glasgow to open towards the end of the first quarter of 2021, and The Samuel in Dublin would follow in mid-2021.

The two hotels in Manchester,a s well as the Clayton Hotels in Bristol and Glasgow and Maldron Hotel Merrion Road in Dublin, were now projected to open in the first quarter of 2022.

Dalata said the extension at Clayton Hotel Birmingham would, however, open earlier than expected in November.

The company said it did not have firm timelines for the remaining pipeline projects on which construction had not started, with the opening dates for those under review.

"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," said deputy chief executive officer Dermot Crowley.

"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."

Crowley said that, since the extent of the pandemic emerged in early March, the company had focussed on the protection of its people, its business and its cash.

"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."

"We will remain very focused and energised in meeting the challenges ahead and exploiting the opportunities that arise."

At 1057 BST, shares in Dalata Hotel Group were up 4.02% at 271.5p.

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