Wasps needs to waive bond covenants after being stung by Covid-19 losses

Premiership rugby union club Wasps is asking bondholders to waive covenants after it revealed the extent of its financial problems caused by Covid-19.

The club’s parent company needs permission to be able to lend more money “to allow it to continue to trade as a going concern while the Government’s public health restrictions to control COVID-19 remain in place”.

The club is having a strong year on the pitch and could become champions for the first time in 12 years later this month. But off the field they must tackle serious financial challenges.

Wasps Group, which includes the rugby union club, stadium operators Arena Coventry and events company IEC Experience, recorded an EBITDA loss of £6.5m in the year to June.

This was a £17.1m reversal from the previous year while losses will have continued since the year-end because of the restrictions on attendance at live sport and events.

Group revenues were down 36%, to £22.2m, with all three parts of the business significantly hit.

Stephen Vaughan, chief executive of Wasps Holdings, said: “The Wasps Group had a good start to the year up until the impact of Covid-19 and the temporary closure of the Ricoh Arena in line with Government health restrictions from 21 March this year.

“Since then, we have taken a number of mitigating actions to preserve cash, reduce costs and maintain liquidity to limit the impact on the business.”

The group is now seeking permission from the holders of the outstanding £35m bonds to change some of the conditions that are in place.

The proposals are designed to help Wasps “to withstand the impact of Covid-19 and are aimed at restoring the Wasps Group’s financial position as soon as possible”, it said in a statement to the stock market.

The changes would assist with plans to refinance the bonds by their scheduled maturity date in May 2022.

Wasps said it would also mean it could improve its financial strength “through the acceleration and implementation of its development plan for the Ricoh Arena and surrounding land and facilities”.

Vaughan added: “We are now asking bondholders to support the amendment to certain leverage and cashflow covenants attached to the Bond in light of the ongoing restrictions. The approval of these proposals will also give the Wasps Group the flexibility to access additional liquidity, if required.”

Wasps had been making plans for the gradual re-opening of the Ricoh Arena in a Covid-19 secure way, but this was scuppered by the Government’s announcement two weeks ago that restrictions are expected to be in place for up to six months more.