Investor Alert

Sept. 29, 2020, 3:18 a.m. EDT

John Menzies warns over 2021 Ebitda covenants

By Anthony O. Goriainoff

John Menzies PLC on Tuesday said that if passenger flight-volume recovery were to be significantly delayed beyond those assumed by the board's severe but plausible downside scenario, it could face a material uncertainty of meeting the minimum Ebitda covenants in 2021.

Should these circumstances arise, the U.K. aviation-services group said it would "seek to negotiate a second restructuring of covenants to ensure continuity of lender support, together with considering further cost reductions" as it has a good working relationship with its banking syndicate.

The company earlier in September announced a new covenant package which included a minimum earnings before interest, taxes, depreciation, and amortization covenant tested on a quarterly basis. It also included a new minimum liquidity covenant requiring the company to keep a minimum of 45 million pounds ($57.8 million) liquidity.

John Menzies posted a pretax loss of GBP80.1 million for the first six months of the year compared with a loss of GBP4.4 million for the first half of 2019. The company said it booked higher costs for the period.

Underlying pretax loss--a key measure which strips out exceptional and other one-off items--was GBP48.7 million compared with a profit of GBP8.2 million for the year-prior period.

Revenue was GBP431.5 million compared with GBP649.9 million the year before.

"On the basis of current visibility and assumptions for ground handling and cargo volumes, second-half revenue is expected to be at a similar level to the first half with profitability benefiting from a more significant contribution from various government support programs and continuing tight cost management," the company said.

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