Decisive action on cash flow

Whitbread likely to breach covenants, halts investment

Premier Inn

Premier Inn at Lomondgate: the group is halting expenditure

Hotels group Whitbread today said it is likely to be in technical default of its covenants as a result of the interruption to cash flow, and is in talks with its banks about a waiver.

The company is closing its Premier Inn chains in the UK and Germany and halting expenditure on refurbishment and expansion.

It is in discussions with the UK Government regarding the use of some hotels, in locations near hospitals, to support front-line key workers.

Whitbread said it entered the year with a strong balance sheet and access to significant liquidity. It has “material headroom” on its funding facilities, and will be paying all its rent payments this quarter.

However, it has taken a number of “decisive actions” to reduce cash outflows during this period, including room refurbishment plans, marketing, non-essential training and staff recruitment.

All employees remain on full pay and should be eligible government support.

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