No recommendation
No news or research item is a personal recommendation to deal. Hargreaves Lansdown may not share ShareCast's (powered by Digital Look) views.
(Sharecast News) - Naked Wines announced the completion of a new $60m credit facility with PNC Bank on Tuesday, replacing its previous facility with Silicon Valley Bank.
The AIM-traded firm said the five-year facility, secured against global wine assets, offered margins of SOFR plus 2.75% to 3.25%, contingent on facility headroom.
A single financial performance covenant required a fixed charge cover greater than 1.2x, tested only if liquidity fell below $12m.
The new facility provided several benefits, including increased liquidity due to higher advance rates, improved inventory eligibility, and no minimum cash holding requirement.
That was expected to boost unconstrained liquidity by $25m to $30m based on current inventory levels.
Additionally, the facility reduced interest costs and offered greater operational flexibility with fewer financial covenants.
At completion, Naked Wines expected to have over $40m in available liquidity.
If the covenant was tested, the company would need to generate about £3.5m of adjusted EBITDA to meet the performance hurdle.
The company's full-year audit procedures would incorporate the new facility's impact, with its 2024 financial year results expected by the end of July.
"I'm pleased to have agreed this new facility with PNC Bank and welcome them on board as our new financial provider," said chief executive officer Rodrigo Maza.
"The new facility proves the strength of the Naked's balance sheet and business outlook while reinforcing our liquidity and ability to invest in bringing the best wines to our customers.
"We look forward to working closely with PNC and continuing to support independent winemakers around the world."
In a related announcement, Naked Wines said its chief financial officer James Crawford would step down in the autumn, following the finalisation of the new credit facility.
Crawford's departure aligned with the incentive arrangement agreed upon when he rejoined as CFO in 2022.
The board said he had played a key role in strengthening the company's financial position over the past year.
Crawford would oversee a transition, including the conclusion of the audit and presentation of the 2024 results.
Naked Wines said it had initiated a well-advanced transition plan, and was actively recruiting a permanent successor, expected to be in place by Crawford's departure.
"James has been with the company for over 10 years, as both CFO and a period as managing director of Naked Wines UK," said non-executive chairman Rowan Gormley.
"During his tenure, Naked has grown from annual revenues of £40m to £290m in 2024 and James' leadership and expertise have played a valuable role in navigating that growth and the subsequent challenges.
"On behalf of the board and the company we extend our gratitude to James for his service and wish him the best in his future endeavours."
At 0926 BST, shares in Naked Wines were up 6.05% at 64.74p.
Reporting by Josh White for Sharecast.com.
