Hills Limited has secured a new long-term financial facility totalling $51 million over the next five years.
The new facility includes $36 million from niche financer Assetsecure and a $15 million secured debt facility from the Commonwealth Bank of Australia. This replaces Hills’ prior facility of $110 million in unsecured finance.
The deal is good news for Hills, which has undergone a “back to basics” transformation by attempting to repair relationships with vendors, customer and employees.
In 2015, Hills faced a number of major hurdles including one of its biggest vendors, home automation company Crestron, switching to a direct model. In its full-year results, the distributor made a $94 million write-down of good will and admitted it needed to make another $66 million non-cash impairment for goodwill, intangible assets, deferred tax assets and freehold property.
The ASX-listed company's share price has tumbled from $1.18 at the start of 2015 to just 22 cents as of 11:45am this morning.
Chief executive Grant Logan said that Hills was looking for new financing that would better fit the company’s size and nature as it transformed from an industrial manufacturer to technology and health distributor.
Chief financial officer Gareth Turner said: “The 5-year debtor finance facility suits Hills as a value added technology distribution and health business in that it provides direct funding for the required investment in working capital over the longer term.
“The company’s debtors’ ledger is well-managed with the majority of the book being covered by trade credit insurance. This make it’s the most efficient and effective means of obtaining longer term financing.”
Hills copped a $69 million loss for the half-year period ending 31 December 2015. Revenue fell 27.7 percent to $164.1 million for the six-month period.