Bovis Homes signs £150m banking deal

Bovis Homes Group has signed a four-year, £150m banking deal to replace its previous debt facility, which was agreed in the final quarter of 2008.

The terms have improved since its former facility, because of an upturn in the housing market since then and the group's strong balance sheet, with £113m of net cash at 31 December 2009.

At present LIBOR rates and anticipated levels of gearing, the group's cost of debt is expected to be around 2.9% during 2010, decreasing to circa 2.5% in 2011.

The new revolving credit facility, which will expire in September 2013, has been agreed with a syndicate comprising five banks, with four of which Bovis has an existing relationship.

It features three covenants tested semi-annually, as for the previous facility, with an option for the group to switch from a cash interest cover test to a profit interest cover test.

Bovis Homes paid around £2m of arrangement fees and associated costs for the deal, which will be charged to the income statement over the term of the facility. Commitment fees will also apply at normal commercial rates.

The group said in a statement: “The new deal provides the group with a banking facility with the financial flexibility to allow it to benefit from its strong balance sheet by continuing the process of reinvestment in residential land thus increasing the output capacity of the group.

“Together with a reduction in its effective interest cost and an increase in facility duration, this flexibility provides the group with a more appropriate banking facility during an important period of investment for the group.”