Literacy Capital Secures £50 Million Credit Facility
Why we think this is good
The RNS announcement by Literacy Capital plc is positive overall, as it indicates the company has secured an increase in its Revolving Credit Facility (RCF) limit from £40 million to £50 million with its existing lender, OakNorth Bank. This provides the company with additional financial flexibility and liquidity, which is a favorable development. The terms of the RCF, including interest rates and expiry date, remain unchanged, and the company's gearing is expected to remain comfortably below its borrowing policy limit. This suggests the additional financing is being used prudently and not for excessive leverage. While this is a positive announcement, it does not meet the criteria for a 'Very Good' rating, as it is not a profit upgrade or a transformational acquisition.
Key Points
- Literacy Capital has increased the limit of its Revolving Credit Facility from £40 million to £50 million
- The existing rates of interest and term (expiry in September 2027) are unchanged
- The increase in limit is not expected to increase costs for Literacy
- The company's Borrowing Policy permits indebtedness of up to a maximum of 20% of its Net Asset Value
- Gearing is expected to remain comfortably below this level, with the LTV not expected to exceed 10% for a sustained period
Summary
Literacy Capital plc, a listed investment trust focused on investing in private UK businesses, has announced an increase in the limit of its Revolving Credit Facility (RCF) from £40 million to £50 million with its existing lender, OakNorth Bank. The existing rates of interest and term (expiry in September 2027) are unchanged, and the increase in limit is not expected to increase costs for Literacy. The company's Borrowing Policy permits indebtedness of up to a maximum of 20% of its Net Asset Value, and the RNS states that gearing is expected to remain comfortably below this level, with the LTV not expected to exceed 10% for a sustained period.