Published on 16 - July - 2009
Focus faces credit reviewDIY and garden retailer's credit facility to hinge on auditor's report
Ernst & Young will deliver a credit review of Focus DIY to the group's lenders this Friday July 17.
GMAC and HBOS have agreed in principle to renew a two-year £50m credit facility with Focus that expires in December, but have commissioned Ernst & Young to compile an independent review of the DIY and garden retailer's finances.
Focus, which was hit by the withdrawal of credit insurance from some of its suppliers late last year, will almost certainly have to pay higher interest on the new revolving credit facility once it is agreed.
The company expects Ernst & Young to finalise the report by the end of next week, after which it hopes to finalise the terms of the extended facility. The company, which has a number of leased stores that are losing money, is considering its options to mitigate its exposure from its non-trading property leases and is in discussions with the landlords concerned.
Focus is trying to follow the example of JJB Sports Plc and agree a company voluntary arrangement under which it would stop paying rent on closed stores in exchange for a one-off payment.
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