DIY group Grafton signs deal with lenders
BUILDERS merchanting and DIY group Grafton has signed a new deal with lenders that will save it £3m (€3.6m) a year.
The firm said it had agreed five-year £460m revolving credit facilities with its relationship banks, with a maturity date of May 2019.
"The refinancing takes advantage of improved lending conditions and will lead to annualised finance charge savings based on current drawings of circa £3m per annum," said Grafton, which has operations in the UK, Ireland and Belgium.
"The increased facilities provide Grafton with additional headroom as the group continues to execute its growth strategy."
Analysts said the deal would give the company scope for growth and would add 1.3p earnings per share on a full year's basis – just over 3.5pc – to 2015 forecasts.
"The announcement that new banking facilities will lower Grafton's finance charge continues the group's very positive sequence of announcements," said Davy Stockbrokers' Flor O'Donoghue.
"Forecasts, upgrades and the recent sell-off imply that the stock's valuation is looking increasingly attractive."
Such positive earning momentum was at odds with the recent sharp sell-off in the stock, which was looking increasingly overdone, she said.
"The stock, at its lowest level since last September, is now trading on under 15x 2015 forecasts, allowing for the expected finance cost-savings," she added.
"We have already raised current year forecasts by 10pc since the start of the year. The group's P/E has shrunk to its lowest level since end-2012."
Elsewhere, Robert Eason of Goodbody said Grafton had net debt of £134m at the end of last year, split £151m cash and £285m gross debt.
"The new facility gives the company significant scope to grow both organically and /or through acquisitions," he added.