UK firm secures three years' finances after bank renegotiations

Halliwells has renegotiated nearly £20m of bank finance facilities in a move that frees the firm from previous terms requiring it to maintain a minimum number of equity partners and secures its finances for the next three years.

The refinancing, which was agreed last week, will strengthen the national firm's position after a difficult few years that have seen it lose a large number of partners, including equity partners.

The firm has agreed £19.8m of facilities with Royal Bank of Scotland, secured by a debenture on the firm until April 2013 that effectively gives the bank security over the firm's assets. This involves a £5m term loan, a £2m overdraft and a £12.8m revolving facility. The firm expects to reduce total debt, which currently stands at £22m, by 50% over this period.

Halliwells had been in danger of breaching the terms of its previous loan agreement, repayable in May 2011 and also secured by a debenture. This had stipulated that Halliwells must maintain a minimum of 37 equity partners in the firm at any one time – a requirement put under strain in the wake of partner departures.

Since November 2008 some 48 partners have left or announced their intention to leave Halliwells and, while it currently counts 42 equity partners, this figure is expected to drop to 32 when those who have handed in their resignations but are currently being held to notice leave the firm.

Now, instead of the minimum partner number, Halliwells has agreed to keep at least £12.9m of capital in the firm. The firm has also agreed to lock members' capital – which has not been borrowed through a professional practice loan – into the firm until the current banking facility expires.

This means exiting partners who paid in their own capital to join the equity, or those who left their drawings in the firm to pay off borrowed capital, must wait until 2013 before their capital is returned. Halliwells said this will only affect around 10% of the firm's current capital, with the firm paying back professional practice loans to the bank within seven days of a partner's departure.

Halliwells managing partner Jonathan Brown said: "We have successfully completed new medium-term bank facilities that run until spring 2013. We feel obtaining this facility for such a period in the present climate is very favourable.

"The new bank facility gives our business a platform to allow us to grow the business."