Hornby secures new lending deal amid overhaul
The Scalextric-to-Airfix business has agreed a new financing package worth up to £18 million.
Troubled toymaker Hornby has secured a new financing package with its lenders as it looks to stage a turnaround after hefty losses and falling sales.
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The group – best known for its model railways and Scalextric car race tracks – said it had agreed a lending deal worth up to £18 million to support the strategy of rebuilding the brands.
It comes amid an overhaul being led by chief executive and interim chairman Lyndon Davies, who was forced to take on both roles after previous interim chairman David Adams quit to take up another appointment, having just been hired to the role last June.
Having a robust balance sheet is important to give our customers, suppliers and retail partners full confidence in our ability to execute on the current plan and continue building beyond Hornby
The group revealed talks over the lending package in April as it said it needed more cash for its plans to return the firm to profit.
Announcing the new financing, Hornby said: “Whilst the board believes it is unlikely that we will need to draw down on the entire availability, the board is of the opinion that having a robust balance sheet is important to give our customers, suppliers and retail partners full confidence in our ability to execute on the current plan and continue building beyond.”
Hornby, which in late 2017 said it would raise £12 million through a fresh equity placing, warned over full-year results in April, although it said sales had improved at the end of last year.
The group sounded the alarm over full-year figures in January, cautioning that poor Christmas trading would contribute to bigger-than-expected losses.
Hornby is majority-owned by Phoenix Asset Management, which is among the lenders to agree the new financing deal.
Under its turnaround, the firm has reduced product ranges, slashed costs and cut back on investment as part of plans to shore up the balance sheet.