Report: Focus renegotiates loans

The Apax- and Duke Street-backed DIY retailer is thought to have suffered from the UK’s retail slump.

Focus, the UK DIY retailer owned by private equity firms Apax Partners and Duke Street Capital, has renegotiated its bank loans to avert financial problems, according to a report. The new arrangements will see lending banks waiving covenants on Focus’ loans until April 2007, but demanding that the company’s interest payments will be higher.
It is believed that the company’s main banking facility is worth about £200 million, on which it was previously paying less than eight percent interest. However, the company admitted last year that it was likely to break its banking covenants
The report in UK newspaper the Mail on Sunday said the terms of the new agreement, as yet undisclosed, are thought to involve a 0.25 percent increase in interest payments, and an extra lump sum payable in 2014.
The report noted that if this sum applied to the whole loan it “would leave the effective interest rate of Focus’s debt at about 15 percent”. However, it adds that it is thought to apply to less than half the loans.
Duke Street Capital could not be reached for comment. Full details of the new arrangements are expected to emerge this week.
The UK retail sector is in a slump at present, following what was widely predicted to be the worst Christmas trading on the UK’s high streets in 20 years.
A Confederation of British Industry survey found that only 17 percent of retailers reported a rise in sales in November, compared to 51 percent reporting a fall. This balance of minus 34 percent is the lowest figure since the CBI began surveying the sector in 1983.