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Loungers extends debt facilities ahead of reopening

Fri 09 April 2021 10:30 | A A A

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(Sharecast News) - Café, bar and restaurant operator Loungers said on Friday that its debt facilities have been extended and its covenants reset as it prepares to reopen 47 sites in England next week.

The company, which operates under the Lounge and Cosy Club brands, said its lending banks Santander and Bank of Ireland have approved a 12-month extension to the incremental £15m revolving credit facility that was put in place in April last year.

This additional facility now runs to October 2022 and provides the group with total RCF facilities of £25m. Covenant tests at 18 April 2021 have been waived and subsequent quarterly tests until 26 December 2021 have been re-set to provide appropriate headroom to enable a full resumption of its new site roll-out programme, Loungers said.

The company will reopen its venues in a phased manner, initially with 47 sites in England on 12 April for takeaway and external trading, while five sites in Wales will open on the same basis on 26 April.

Assuming no changes to the government's roadmap, it will re-open all of its English sites by 17 May and its sites in Wales later in May subject to confirmation from the Welsh government.

The group also announced plans to open four new Lounge sites in Wolverhampton, Stourbridge, Welwyn Garden City and St Ives by 26 May, taking its estate to 172 in total. The new sites were partially fitted out going into lockdown at the end of December 2020 and are currently being completed.

Chief executive Nick Collins said: "Having been closed since 30 December , it is really exciting to be back in some of the sites, preparing to open our terraces to customers on Monday. Whilst it is frustrating that we have to wait until 17 May to re-open more fully given the steps we have taken to ensure our business is Covid-safe, it does allow us to re-open gradually, bring our teams back from furlough and get the supply chain back up and running.

"We expect to trade well once the estate is fully re-opened, particularly with our strong coastal presence as we look forward to a summer of staycationing. Planned new openings in Blackpool, Scarborough and Aberystwyth ahead of the summer holidays will reinforce this position."

House broker Liberum said: "We expect Loungers to explode out of the blocks once sites reopen, with its agile, all day, suburban-based model well suited to returning consumer demand."

It noted that like-for-like were up 25.1% between 4 July and 4 October 2020, an impressive 30% above the industry average, "highlighting its broad appeal to a wide demographic that its peers are unable to replicate".

"We expect trading performance to continue to outpace the market following Lockdown 3.0. This will be supported by the continual evolution of the offer, with recent investment focused on adapting outside trading areas. The trading recovery will be aided by the extension of the VAT cuts, with sales historically 65% weighted towards food and non-alcoholic drinks."

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