DWF CEO Andrew LeaitherlandDWF Extends Credit Facility, Takes on More Debt as it Braces For Virus Impact
The new agreement is in place to help see the firm through the lockdown brought about by the COVID-19 pandemic.
April 24, 2020 at 04:42 AM
3 minute read
Publicly traded DWF and its lender have agreed an extension of the law firm's current revolving credit facilities, as well as an easing of requirements to allow the firm to take on more debt to help it cope with market turmoil fueled by the COVID-19 pandemic.
The U.K. main market listed firm has agreed to extend its current arrangements with its bank with a secondary revolving credit facility of about $18.5 million, in place for 18 months, the firm announced in a statement on Friday. This tops up the firm's existing $98.8 million facility, and provides the firm with access to working capital facilities of $151 million.
Despite the extension, the firm said it "does not anticipate an immediate need to use this additional facility", but that it provides "greater liquidity at a time when the normally high level of seasonal cash collections could be impacted by COVID-19".
The firm's lender has also eased debt requirements. The firm's previous arrangement allowed it on take on debt of 1.5 times its net debt EBITDA (debt minus cash), which for 2019 stood at $41.5 million. The relaxing of requirements means that the firm can now take on debt of twice the EBITDA.
Total net debt at the firm was $43.2 million at the end of the last financial year. The firm's lenders are Natwest, HSBC and Lloyds Bank.
The eased measures are in place "for the next four testing dates", providing the firm with "the appropriate headroom to deal with any COVID-19 headwinds throughout the coming year".
On the latest measures, the firm's CEO Andrew Leaitherland said in the statement: "Today's announcement demonstrates DWF's strong relationship with its lenders and we are pleased with their continued support. These actions will help to ensure we retain strong liquidity to navigate the challenges presented by COVID-19.
"We are well placed to deal with the current economic pressures through our resilient, counter-cyclical business model. While activity levels in some areas of our business have reduced due to COVID-19, we are beginning to see an increase in activity and revenue opportunities in other areas, including insurance."
DWF has made efforts to counteract the effects of the pandemic on the U.K.'s listed firms, and this week won a place on BT's refreshed legal panel.
Though the firm's share price slumped to as low as 69.6p earlier this month, it has since recovered and as of Friday morning sits at 84.4p.
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