NEC in ‘sustainable position’ after £100m cash injection
The NEC Group says it’s in a more “sustainable position” following a refinancing and £100m cash injection from investor Blackstone.
After two months in post as the new CFO, Paul Reeve said despite another year of more than £16m in losses caused by the pandemic, the NEC is bouncing back.
Reeve joined the group after the appointment of Melanie Smith as chief executive. Smith has succeeded Paul Thandi who moves to the position of chairman after nearly 17 years as CEO.
Work is also progressing with Birmingham and Solihull councils on its vision for an urban masterplan, set to create 5,000 new homes, 380,000 sq ft of commercial space and 150,000 sq ft of outdoor event space. Reeve anticipates developments on this will be revealed in the first half of 2024.
He focused on EBITDA reports of the group generating £52.2m on revenue of £188m this year, compared to the previous year of £15.4m on revenue of £93.5m.
Reeve said to TheBusinessDesk.com: “We are returning for the first time to growth, so we will be in a better position next year. After our refinancing, we’re in a really sustainable position for the first time since the pandemic.
“Losses are totally from pandemic legacy. The biggest part of the business is exhibitions, which have a very long lead time and Covid took two years away from the organisation of these. Having to reorganise these events once again takes a long time.
“Like everyone else, we suffered from supply chain and labour issues, but that has settled down now”.
Two unsecured loans are owed by NEC Group subsidiaries totalling more than £325m with interest charged at SONIA plus 4.35%, resulting in huge payments to just maintain the loan.
Reeve said that whilst everyone’s interest rates have essentially quadrupled, the refinancing was secured with an ambition of reshaping its debt.
He said: “£70m of that £100m cash injection was used to pay off debt, and reducing our debt burden has reduced our interest bill which means on a cash basis we’re growing”.
And with this cash, the NEC plans to invest in opportunities such as improving its buildings and looking at how it can pay even more above the national living wage.
Despite general economic headwinds, the NEC feels it is in a very strong position thanks to the desire for “face to face interactions”.
“There’s so much value placed on being face to face. After the pandemic wrote these interactions off, its now supercharged them”.
