Lookers agrees refinancing deal to cut debt by 30m as car dealers struggle

CAR dealer Lookers said yesterday it agreed a refinancing deal to slash its debt by around £30m, as it reported a slump in profits.

Lenders agreed to the £210m refinancing deal on the condition that Lookers suspended its dividend payouts until June 2010. It added it would only return to a progressive dividend policy when debt was returned to a “more satisfactory level.”

The company, which had net borrowings of £149.5m at the end of 2008, said the new loan facilities would be more expensive, with interest costs at between four per cent and 10 per cent above Libor, the rate at which banks lend to each other.

Lookers added that it would consider other sources of extra capital as it sought to minimise the extra costs of bank borrowings.

Lookers said pre-tax profit for the full year dropped 43 per cent year-on-year, to £14m from £24.5m the previous year.

But the company added performance in the first quarter, ended 31 March, beat expectations.

Car dealers and manufacturers are struggling worldwide as the recession hits consumers’ pockets, and they shun big purchases like cars.