Hawthorn Leisure parent company New River has said it is “well prepared” to deal with the prospect of a prolonged loss of income from its pub portfolio.

Following Friday’s (20 March) Government instruction, the business has closed all of its Hawthorn community pub sites, but as a result of extensive scenario testing, factoring in the loss of its pub income, it is confident it “has significant covenant headroom and a capital structure that is well placed to absorb a prolonged period of uncertainty.”

At the end of last week, the company improved its financial position to £75m of unrestricted cash balances and £45m of committed undrawn credit facilities, providing £120m of available liquidity.

In its scenario testing, it assumed there would be a complete loss of pub income for the next six months and a reduced income beyond this, as well as a significant reduction in its retail portfolio income (which represents 70% of its net rental income).

Faced with this prospect, the company will still have in excess of £50m of cash and £45m of undrawn credit facilities after 12 months.

The group has welcomed the Government’s financial support packages announced last week, and has said the rates holiday will apply to the entire pub portfolio, saving the company and its tenants an estimated £5m in cash flow over the next 12 months, and that it is supporting its tenants in applying to the Job Retention Scheme.

It is also working with advisors to apply for the Covid Corporate Financing Facility programme using its Investment Grade credit rating, and with insurance brokers and insurers to make a claim for the business disruption caused by COVID-19 and the loss of rent.

Topics