Stagecoach agrees new extension to waivers on £325m debt

LaToya Harding
·Contributor
·2 min read
LONDON, ENGLAND - JUNE 29:  A Megabus arrives in the Quadrangle carrying this year's Queen's Young Leaders for the 2017 Queen's Young Leaders Awards Ceremony at Buckingham Palace on June 29, 2017 in London, England.  (Photo by Chris J Ratcliffe - WPA Pool/Getty Images)
The beleaguered transport operator, which owns the Megabus and Supertram brands, said the extension had been agreed to 30 October next year. It had previously arranged an extension to 31 October and 1 May 2021. Photo: Chris J Ratcliffe - WPA Pool/Getty Images

Stagecoach (SGC.L), Britain’s largest bus operator, has secured a further extension to its £325m ($428m) banking covenant waivers to help it battle through the coronavirus pandemic.

The beleaguered transport operator, which owns the Megabus and Supertram brands, said the extension had been agreed to 30 October next year. It had previously arranged an extension to 31 October and 1 May 2021.

In a brief statement, the company said: “In June 2020, we took the precautionary measure of agreeing covenant waivers, in respect of the periods ending 31 October 2020 and 1 May 2021, with our group of lending banks for our facilities expiring in March 2025.

“Further waivers have now been agreed with the same group of lending banks in respect of the period to 30 October 2021. As an alternative to the covenants, we have agreed to a minimum liquidity threshold as at 30 October 2021.”

The company added that it still has "strong liquidity," with available cash and undrawn, committed bank facilities of over £800m.

Stagecoach, like many companies in the transport and travel industry, has suffered from ongoing travel restrictions across the country thanks to the current health crisis.

READ MORE: Transport for London secures £1.8bn bailout from UK government

Last month it warned that COVID-19 had a huge impact on demand despite a steady recovery after the first lockdown. Revenues were just 50% to 60% of last year’s levels for its regional buses.

The firm said government-imposed restrictions may discourage public transport use in the short term, although its regional fleets are now operating vehicle mileage in excess of 93% of prior year levels.

In October, the company had £605m of adjusted liquidity, including £437m of cash and said it “maintains a solid financial position with investment grade credit ratings,”

At the time Martin Griffiths, chief executive, said: “The safety and well-being of customers and our people remains our absolute priority as we continue to navigate the uncertainty from Covid-19.

“We have a strong business, with good liquidity, devolved operating companies closely focused on our customers and local communities, good financial discipline and a supportive relationship with government and our local authority partners.

“As well as continuing to provide vital connections to jobs and public services during the current pandemic, our sustainable public transport services are central to long-term plans for a greener, smarter, safer, healthier and fairer country.”

The company plans to update investors in December with its half-year profit announcement.

Watch: What are freeports?