Bulmer wins year's breathing space as banks agree deal

Susie Mesure
Saturday 02 November 2002 01:00 GMT
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HP Bulmer, the struggling cider-maker, yesterday revealed that its bankers had agreed to refinance the business after a string of profits warnings put it in breach of its banking covenants.

Analysts said the news, which accompanied its restated accounts, bought Bulmer some crucial time to get its business back on track after a disastrous year that has seen the share price collapse by nearly 80 per cent.

The company, which recently dismissed both its chief executive and finance director, said the deal meant its bankers and loan noteholders would have to approve any future dividend payments. Bulmer has already axed its dividend for last year and warned that it does not expect to pay one next year.

"We've taken the first step of a turnaround by getting the bank deal in place and we're well advanced in the plan of action that needs to be taken," Will Samuel, Bulmer's chairman, said.

Last month, the company appointed John Darlington, who helped to turn round the high-street retailer Sears, as an adviser. It hopes to appoint a new chief executive by the end of the year and has shortlisted five candidates.

The new financing deal covers Bulmer until November 2003, but will force the company to make higher interest payments on its debt. It owes its creditors more than £226m.

Bulmer, which has issued five profit warnings in the past 11 months, said that after restating its accounts for the year to 26 April, its net profits were 60 per cent, or £1m, lower than previously reported at £654,000. This was the result of a number of additional costs that emerged in the past two months, including £3.8m of promotional costs.

The review, by its accountants Deloitte & Touche, also found that £1.5m of credit notes accounted for in the financial year to April 2001 had been incorrectly recorded in the company's results, as had £1.5m of discounts to its suppliers. The overall effect of the review into its accounts reduced the group's shareholders' funds at 26 April by £5.2m, of which £4.2m was an adjustment to the previous year.

Stuart Price, an analyst at WestLB Panmure, said the review "implies the business has to be managed for cash and the turnaround has to happen very quickly".

The group pledged to cut its debt, of around £130m, by cutting costs and selling assets. "I would like to get the business back to being UK cider and selective beer interests, which does its international business in partnership with others," Mr Samuel said. The group is keen to find a buyer for its South African arm, which it said in July it wanted to sell.

Bulmer also said it was renegotiating its payments to its largest apple suppliers to spread them out over the year. The company has rescheduled its annual shareholders meeting for 25 November; it cancelled the last one just five minutes before it was due to start.

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