The medium term revolving credit facility is part of the bank’s plans to recapitalise the business along with the issue of equity capital it announced at its AGM, which it hopes will help it to resolve its shortfall in regulatory capital.
The new credit facility comprises £83.5m for Robinson Way and £1.5m overdraft facility for the whole group, which will mature in May 2011.
The credit is being provided by a consortium of 10 banks led by HSBC and Royal Bank of Scotland at an initial interest rate of LIBOR plus 2 per cent, which is subsequently linked to the LSB’s prevailing gearing levels.
LSB expects to reduce the credit facility by £15m taking it down to £70m following the planned sale of the its factoring business and its equity capital issue.
If a minimum of £32.5m in regulatory capital has not been raised by the end of October this year, the facility’s maturity date will be brought forward by one year to 2010 and LSB has also agreed to start proceedings for the sale of Robinson Way or the whole group if this occurs.
LSB chief executive Robin Ashton, says: “The facility agreement is a significant and successful first step in our plansto re-capitalise the company.
“It allows LSB to pursue its strategy of growing and further developing the successful Robinson Way business which is strategically well-positioned in a growth market.”