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Bovis Homes agrees new £150m four year banking deal

Bovis Homes announced today it has signed a new four year banking deal giving the housebuilder a £150 million revolving credit facility expiring in September 2013.

The move has cost the group £2 million in arrangement fees and associated costs, leaving it with £113m net cash in hand at 31 December 2009.

The cost of the debt is expected to be circa 2.9 per cent during 2010, decreasing to circa 2.5 per cent in 2011.

The statement did not indicate what Bovis’ interest charges were under the previous facility.

The facility syndicate comprises five banks, of which four were existing banks for Bovis and one is a new entrant.

The new overdraft facility replaces the group’s previous facility.

The facility includes a covenant package featuring three covenants tested semi-annually as per the previous facility agreement with an option for the group to switch from a cash interest cover test to a profit interest cover test.

Bovis said the the terms of the new deal are a substantial improvement on the previous facility

The previous facility was negotiated in the final quarter of 2008.

A statement from the firm said: “The new deal provides the group with a banking facility with the financial flexibility to allow it to benefit from its strong balance sheet by continuing the process of re-investment in residential land thus increasing the output capacity of the group.

“Together with a reduction in its effective interest cost and an increase in facility duration, this flexibility provides the group with a more appropriate banking facility during an important period of investment for the group.”