Carclo PLC (LON:CAR) shares surged on Monday as the technical plastics maker reported new funding arrangements with its banks and that its first quarter trading had been ahead of its coronavirus-adjusted assumptions.
In a trading update, the firm said it has agreed with its main secured creditors, HSBC and the pension Scheme, to have access to ongoing bank facilities as well as visibility over repayment schedules through to July 2023.
As part of the agreement, Carclo said it has entered new facilities with HSBC comprising a term loan of £34.5mln and a Revolving Credit Facility of £3.5mln. The firm has also reached an agreement with the Trustees of the Pension Scheme in respect of both the actuarial deficit and the resultant deficit repair contributions to be made over the next three years; £2.8mln in 2021, £3.9mln in 2022 and £3.8mln in 2023.
“Securing a suitable long-term funding position for the group has been a key focus of the board. With a more stable base now established, the board can turn its focus to delivering its growth strategy aimed at capturing the significant long-term opportunities it sees for the group”, the company said.
Meanwhile, Carclo said revenues from continuing business for its first quarter was 12% lower year-on-year, although it added that it had seen “more resilient demand conditions” in certain segments and as a result its overall trading performance was “ahead of the board’s initial, [coronavirus] adjusted, planning assumptions”, with “encouraging performances” in both its technical plastics and aerospace divisions.
Despite this, the group said it did not believe it was possible to provide guidance for its current financial year, adding that activity levels in July were “broadly in line” with those in the first quarter and the firm remained “cautious about market conditions in the near term”.
“The group will continue to take action to reduce its cost base, where appropriate, to mitigate the effect of any reduction in demand, whilst seeking to preserve the capability and capacity to respond positively as conditions improve”, the firm said.
The funding agreements and better than predicted trading appeared to have boosted investor sentiment, with the shares soaring 42% to 11p in early deals.