AMA Group seeks to refinance debt

AMA has been closing some sites and has declined unprofitable work.

Crash repairs company AMA Group is understood to have hired Grant Samuel to assist with its plan to refinance its debt in the coming months.

It is a move which is expected to be closely watched at a time of higher funding costs across the market.

Market analysts say that crash repair industry volumes are down slightly compared with before the global pandemic.

AMA flagged a slip of 15 per cent when it gave its quarterly update. But AMA has been closing some sites and has declined unprofitable work.

Challenging for groups like AMA is they have fixed contracts for insurers, but the cost of repairs is increasing with vehicles becoming more high tech and with inflation.

The group’s debt refinancing is due to start after the Capital SMART pricing negotiations with Suncorp for repairs, which will likely be early or mid-June.

A refinance in the first quarter of the 2024 financial year coincides with the completion of the group’s auditing.

AMA purchased Capital Smart in 2019 for $440m off Suncorp, but Suncorp remains a customer. AMA debt is set to expire in October 2024.

DataRoom earlier reported that AMA’s offshore lenders were expected to be replaced by non-bank providers that typically fund private equity deals.

AMA was earlier said to have a strong relationship with its existing lenders and they are satisfied with its outlook, as the company affirmed guidance of annual earnings before interest, tax, depreciation and amortisation of $70m to $90m for 2023.

It main lender is ANZ, which has syndicated out some of the debt to other banks – predominantly those offshore.

Other lenders are Bendigo Bank and Bank of China, while other top-four Australian banks also provide loans.

At December, AMA had $182.7m of net debt, up 11 per cent from June.

Of its gross debt of $215m, 23.3 per cent consists of convertible bonds, 35.5 per cent is senior unhedged debt and 41.2 per cent is senior hedged debt.

AMA posted a $25.75m loss for the six months to December, but it was down from its $46.3m loss a year ago as strong demand for repairs started to resume after the global pandemic.

It has been hit by labour scarcity, high inflation raising costs, and also suffered some supply chain delays.