Hollywood Bowl
New Coverage: Hollywood Bowl Warns of Loan Covenant Pressure in Downside Scenario; FY’20 Revenue Drops 40% YoY to £80M; EBITDA Down 22% to £29.8M
Mon 12/14/2020 13:48 PM
Relevant Document:
FY’20 Report
U.K. bowling alley group Hollywood Bowl said its last-12-months’ EBITDA loan covenant will come under pressure and could be breached at the end of March in a severe downside scenario or in the event of extended lockdown measures impacting the group’s activity. Continue reading for the EMEA Middle Market by Reorg team's updates on Hollywood Bowl, and request a trial for our coverage of thousands of performing, stressed and distressed credits in the region.
The announcement came a few hours before the U.K. government announced renewed tier 3 lockdown measures across London and South East England beginning on Wednesday. The group has five branches in London, four in Kent and two in Essex.
The company has already secured new liquidity and group-adjusted-EBITDA (pre-IFRS 16) covenant tests for December and March next year that state it must have liquidity including balance sheet cash and any unused RCFs of at least £17 million, and that LTM group adjusted EBITDA pre IFRS 16 must not fall below negative £3 million.
If the covenant is breached, the group would need to negotiate an extension with Lloyds, with which it has a £35 million facility. The group said it is confident it could negotiate the extension given its recent waivers and the cash position of between £18 million and £22 million.
Hollywood Bowl’s revenue dropped 38.8% year over year to £79.5 million in the 12 months ended Sept. 30 after it closed its entire estate between mid-March and mid-August due to the pandemic.
Adjusted EBITDA fell 22% year over year in the period to £29.8 million on a post-IFRS 16 basis, while pre-IFRS 16 it totaled £14 million. Operating profit declined 65.3% year over year to £9.9 million, while operating profit margin contracted by 9.5 percentage points to 12.4%.
The majority of the estate reopened on Aug. 15 and was without revenue for 21.3 weeks of the financial year. For the first half, the group saw like-for-like revenue growth of 8.6% and total revenue growth of 3.3%. Since the reopening of the sector from Aug. 15 to Sept. 30, like-for-like revenue was at 66% of the comparable period last year.
The group had liquidity of £31.8 million and net debt of £8.7 million at Sept. 30. Cash at bank totaled £20.8 million while gross debt was £29.5 million. August, September and October were cash flow positive, it added.
On May 7, the group amended its facility with Lloyds to add an additional £10 million under the government’s Coronavirus Large Business Interruption Loan Scheme, or CLBILS.
On Sept. 21, it extended its facility with Lloyds for a further year to Sept. 2, 2022. The next repayment of £300,000 is due on Dec. 31 and every six months up to June 30, 2022, with the remaining balance repayable on the expiry date.
The facility is subject to quarterly covenant tests as below:
During the year, the group drew down £4 million of its RCF facility, leaving £1 million undrawn at Sept. 30. The RCF would need to be closed for dividends to recommence, it added.
The group also raised £10.5 million through an equity placing and negotiated with landlords to defer or waive payments during the period of forced closure in Spring.
It has received government support under the Coronavirus Job Retention Scheme as it furloughed 98.6% of the total team bringing the payroll to a manageable level, it said.
FY’20 Report
U.K. bowling alley group Hollywood Bowl said its last-12-months’ EBITDA loan covenant will come under pressure and could be breached at the end of March in a severe downside scenario or in the event of extended lockdown measures impacting the group’s activity. Continue reading for the EMEA Middle Market by Reorg team's updates on Hollywood Bowl, and request a trial for our coverage of thousands of performing, stressed and distressed credits in the region.
The announcement came a few hours before the U.K. government announced renewed tier 3 lockdown measures across London and South East England beginning on Wednesday. The group has five branches in London, four in Kent and two in Essex.
The company has already secured new liquidity and group-adjusted-EBITDA (pre-IFRS 16) covenant tests for December and March next year that state it must have liquidity including balance sheet cash and any unused RCFs of at least £17 million, and that LTM group adjusted EBITDA pre IFRS 16 must not fall below negative £3 million.
If the covenant is breached, the group would need to negotiate an extension with Lloyds, with which it has a £35 million facility. The group said it is confident it could negotiate the extension given its recent waivers and the cash position of between £18 million and £22 million.
Hollywood Bowl’s revenue dropped 38.8% year over year to £79.5 million in the 12 months ended Sept. 30 after it closed its entire estate between mid-March and mid-August due to the pandemic.
Adjusted EBITDA fell 22% year over year in the period to £29.8 million on a post-IFRS 16 basis, while pre-IFRS 16 it totaled £14 million. Operating profit declined 65.3% year over year to £9.9 million, while operating profit margin contracted by 9.5 percentage points to 12.4%.
The majority of the estate reopened on Aug. 15 and was without revenue for 21.3 weeks of the financial year. For the first half, the group saw like-for-like revenue growth of 8.6% and total revenue growth of 3.3%. Since the reopening of the sector from Aug. 15 to Sept. 30, like-for-like revenue was at 66% of the comparable period last year.
The group had liquidity of £31.8 million and net debt of £8.7 million at Sept. 30. Cash at bank totaled £20.8 million while gross debt was £29.5 million. August, September and October were cash flow positive, it added.
On May 7, the group amended its facility with Lloyds to add an additional £10 million under the government’s Coronavirus Large Business Interruption Loan Scheme, or CLBILS.
On Sept. 21, it extended its facility with Lloyds for a further year to Sept. 2, 2022. The next repayment of £300,000 is due on Dec. 31 and every six months up to June 30, 2022, with the remaining balance repayable on the expiry date.
The facility is subject to quarterly covenant tests as below:
During the year, the group drew down £4 million of its RCF facility, leaving £1 million undrawn at Sept. 30. The RCF would need to be closed for dividends to recommence, it added.
The group also raised £10.5 million through an equity placing and negotiated with landlords to defer or waive payments during the period of forced closure in Spring.
It has received government support under the Coronavirus Job Retention Scheme as it furloughed 98.6% of the total team bringing the payroll to a manageable level, it said.
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