Dalata Hotel Group, the biggest hotel operator in the State, has successfully agreed an amendment to its debt facilities as it seeks to recover from the impact of the Covid-19 pandemic on its business.
The company announced details of the agreement with its banking partners on Friday. It said it would provide it with additional financial strength and flexibility as it§ reopens all of its 44 hotels.
The previous covenants comprising net debt to earnings before interest, taxes, depreciation, and amortisation and interest cover will not be tested again until June 2022.
These two covenants have been replaced, until that date, by a net debt to value covenant and a minimum liquidity test, whereby the company must have a minimum of €50 million available to it in cash and/or an unutilised amount of the revolving credit facility (RCF).
Additionally, the RCF has been increased by €39 million to €364 million until September 2022 as part of the agreement.
Dalata said it continues to have significant financial headroom. At the end of June 2020, the company had cash resources of €103 million and further undrawn committed debt facilities of €72 million.
The undrawn committed debt facilities have increased to €111 million as a result of the increase in the RCF.
Dermot Crowley, deputy chief executive business development and finance, said the agreement would support Dalata as it "navigates through these difficult and uncertain times".
“Throughout the crisis we continued to maintain very strong relationships with our banking partners,” he said. “Our institutional landlords also continue to actively support Dalata and remain committed to our long-term partnerships.”
Dalata said its “strong balance sheet with comfortable gearing” meant it entered the crisis in a “very strong financial position”, but that it endured “significant challenges” as a result of the Covid-19 pandemic during the second quarter.
However, the cash position was “better than initial expectations” due to cost controls and working capital management, reduced hours for essential workers, utilisation of the Governments’ support initiatives, and the postponement of capital spending.
“The company continues to closely monitor spending, preserve cash and maintain a strong liquidity position,” it said.
The company has now reopened 42 of its hotels in the Republic, Northern Ireland and England. Two final hotels, the Clayton Hotel Cardiff and the Maldron Hotel Belfast International Airport are expected to reopen on July 11th and August 1st respectively.
“Although it is too early to comment on the outlook for the remainder of the year, the pace of bookings over the last week has been encouraging,” Dalata said.
“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 sanitisation procedures, new technologies, and effective physical distancing measures, has been well received by our guests, employees and suppliers.”
Dalata said government restrictions necessitated the closure of most construction sites during the Covid-19 lockdown. Although all construction sites have since reopened, there will be a delay to the pipeline opening dates.
Dalata now expects the Samuel in Dublin to open in mid-2021, while the Maldron Hotel Merrion Road will follow suit in the first quarter of 2022.
Mr Crowley said the business would look for growth opportunities that may arise out of the crisis.
“Our key strengths continue to be our asset backed balance sheet and strong liquidity, our experienced management team, our culture and people, and our record of identifying and securing opportunities in a crisis,” he said.
“We will remain very focused and energised in meeting the challenges ahead and exploiting the opportunities that arise.”
