Tenon expands banking facility with more favourable rates

Tenon expands banking facility with more favourable rates

By Paul McBeth

May 4 (BusinessDesk) - Tenon, whose locally produced wood mouldings are sold in the US, has expanded its banking facility by US$5 million with greater flexibility and more favourable rates.

The Taupo-based company today agreed amendments to its syndicated bank facility to expand its credit line to US$75 million from a previous US$70 million, it said in a statement. The five-year facility expires in May 2020 with better funding rates and more flexibility relating to shareholder distributions.

"That we have been able to favourably renegotiate our banking arrangements at this time is a reflection not only of Tenon's improved financial performance and outlook, but also of the strength of our syndicate relationship," chief financial officer Adam White said. "With these enhancements to the debt side of our balance sheet we can now look forward to accessing opportunities with greater flexibility as they arise."

Tenon's financial performance last year meant it could release a US$7.5 million 'block' reserve its banking syndicate had held against its borrowing capital. It reported a US$2 million profit in the six months ended Dec. 31 and signalled plans to pay dividends in 2016.

The company also negotiated the elimination of a fixed charge coverage covenant unless the difference between amount drawn down on its facility and its limit fell below a certain level.

Tenon had drawn down US$49 million of its facility as at Dec. 31.

The shares last traded at $2, and have gained 8.1 percent this year.

(BusinessDesk)

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