Shepherd Neame has strengthened its financial position in securing a borrowing facility through the Coronavirus Large Business Interruption Loan Scheme.

Its banking lenders, Lloyds and Santander, have agreed to the £25m revolving credit facility, of which £15m is committed and the further £10m will be available on request, maturing on 1 July 2022.

With the new facilities in place, the pubco will have total debt facilities of £132.5m, placing its net debt position at the end of June at approximately £84.5m, a small increase from the half year end at 31 December 2019.

The company’s loan note holder, BAE Systems Pension Funds Investment Management, and its banking lenders have also agreed to waive any technical defaults arising from the coronavirus crisis, and to amend the group’s financial covenants through to September 2021, set on a minimum level of EBITDA and liquidity.

In an agreement with HMRC, the business has also deferred the payment of tax liabilities in the final quarter of the financial year (totalling approximately £11m), which it expects to be settled within the next 12 months.

The terms and conditions of its new financing prohibit the payment of dividends whilst the facility and alternative covenants remain in place, meaning the group will not be paying a dividend in October 2020 or March 2021.

“This is the first time in the company’s long history of over 300 years that our business has been interrupted,” said CEO Jonathan Neame. “As a strong independent family business with a significant local presence, we have tried to do the right thing for our team and our community.”

“We have a clear strategy, a well-balanced business and now a robust financing structure in place to see us on the path to recovery. We are optimistic that we have a strong long-term future as and when this pandemic subsides.”

The business plans to reopen at least 45 managed and 165 tenanted and leased pubs by the end of July.