Hit renegotiating debts, say reports

Restructuring specialist Evercore Partners on board as firm in danger of 'soft' breach in banking covenants.
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Stories on The Hollywood Reporter and in The Sunday Telegraph have suggested that Hit Entertainment is in the process of renegotiating its $470 million debt after facing a 'soft' breach in its loan covenants.

Although Hit remains a profitable company, it has not managed to reduce its net debt/earnings ratio in line with the targets set by the banks in a 'step-down' agreement. This saw Hit agree over time to raise its profitability relative to the size of its debts, said The Telegraph.

An announcement regarding the debt restructuring is likely by the end of the week.

Last year, the group cut 20 per cent of its staff in an attempt to improve its balance sheet position.

The Telegraph goes on to say that Apax Partners - which acquired Hit for £489 million in 2005 - is not thought to be keen to sell Hit or any of its assets at the moment.

Recent figures published by the NPD EPoS Retail Tracking Service, showed that Hit's Thomas & Friends is the number one licence in the pre-school category for the tenth consecutive year.

2010 marks the 65th anniversary of Thomas & Friends, with a host of new product due to be revealed.

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