Pendragon Plc, Britain’s biggest car dealer, has revealed that they negotiated a £530m three-year loan package with lenders that will ensure financial stability amid the global slump in car sales.
Pendragon shares jumped 55 percent in London trading after the company said the deal means it won’t need to issue shares. Lower interest rates mean borrowing costs will fall by £8m this year.
“We have new agreements on the covenants that will allow us to trade on lower profitability without having to go back to the bank,” Chief Executive Officer Trevor Finn said.
Pendragon’s full-year loss before tax was GBP 200.6 million (net £160.1), compared to a profit of £46.5 million in the prior year. (Bloomberg)
Pendragon said it will close another seven dealerships this year, having shut or sold 53 last year to leave it with 301. It also axed 3700 staff last year taking its headcount down to 10,800. CEO Finn said job cuts and the closure of outlets will deliver a better performance in 2009. (Daily Mail)
Trevor Finn also criticized the UK government’s scrappage scheme, saying it was “not enough to make a material difference to customer behavior.”
Finn said the problem was that the scheme is half funded by the car industry, which is already offering significant incentives to customers.
‘Are the car manufacturers going to increase over and above their current incentives further? It’s very difficult to see how that’s going to happen,’ he said. (Reuters)