Speedy Hire has agreed a new £300 million debt facility after a slump in building work pushed the firm towards breaching its covenants.
Speedy Hire will pay interest ranging from 2 to 4 per cent above Libor, or the London interbank offered rate.
Following the first covenant test in June 2009, the group anticipates that the margin will be at 3 per cent.
In addition, a one off amendment fee of 1.5 per cent was paid to the lenders yesterday.
Speedy Hire said the new facility, which is £25 million less than the loan package it replaced, extends until 2012 and offers “prudent levels of headroom”.
Cost-cutting measures since July have resulted in the elimination of 957 jobs and the closure of 82 depots, equal to 17 per cent of the totals.
The company has also sold or returned 470 vehicles, or 15 per cent of its fleet.
These measures will help Speedy Hire save more than £42 million a year, it said.
A statement said: “The board is confident that the revised covenants are appropriate for current market conditions and the group’s trading outlook over the term of the facility.
“Speedy Hire retains the flexibility to set dividend and bonus payments and manage capex in line with business needs.
“Combined with the three year term of the facility, this will allow the group both to focus on managing the business through the downturn and to capitalise on any potential upturn.”
The strength of the group’s cash generation has meant that it has continued to pay down net debt, which is now expected to be below the April 2008 level of £255.6 million.