NH Hotel Group secures €225 million Covid-19 financing

Palazzo Naiada Rome

 

NH Hotel Group has signed a syndicated loan for €225 million with maturity in 2023, which will enable the Company to finance its operational needs in the current global economic scenario.

The agreement, reached within the legal framework established by the Spanish government to mitigate the economic impact of the Covid-19, has been granted endorsement by the Official Credit Institute (ICO) of Spain for the financing of up to €175 million and a guarantee for the remaining €50 million is expected in the next few days.

The operation has been coordinated by BBVA and Santander. Bankia, Bankinter and ICO have also participated.

Since the beginning of the current context caused by the health crisis, NH Hotel Group has carried out a contingency plan with extraordinary measures aimed at ensuring the sustainability of the Company.

One of the objectives was to intensify the culture of preserving liquidity that the Company has maintained for years, and as an initial measure NH Hotel Group has drawn its credit lines in March.

The depth and uncertainty regarding the duration and economic consequences of this situation has required NH Hotel Group to implement several initiatives to drastically reduce all non-priority expenditures and investments.

Among some of the measures promoted, the Group has significantly reduced its marketing and external advisory expenses; temporarily adapted the size of the teams to the scarce existing activity caused by the mandatory closure of the hotels; renegotiated rentals with owners and agreements with suppliers to achieve exemptions and better payment conditions; and temporarily halted investments in hotel repositioning, reducing and postponing these investments.

Also, on April 28th, the Company’s Board of Directors resolved to withdraw the proposal to distribute a gross dividend of €0.15 per share for 2019 financial year, which would have entailed a pay-out of approximately €59 million in 2020.

In addition, the Group has worked with different banks to strengthen the liquidity, result of which is the signing of the syndicated loan that will enable the Company to face the temporary interruption of the hotel business more solidly.

The loan contemplates the possibility of a €25 million extension, to reach a total financing of €250 million euros through the eventual incorporation of new entities.

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