Things looking up for car dealer after £210m boost

LOOKERS, one of Britain's biggest car dealers and owner of the venerable Taggarts brand in Scotland, has been given a £210 million shot in the arm by its bankers after confirming that it had reversed into the red last year.

The group, which operates some 120 retail outlets across 30 franchises, said the new banking facilities would mature in April 2012 and provide a "sound financing structure for the medium term".

But under the terms of the agreement, shareholders will not receive a dividend before 30 June next year.

Finance director Phil White said: "The group has reached agreement with its banking syndicate to extend its existing banking facilities to 30 April 2012.

"Whilst this will involve higher financing costs, the board believes that the additional flexibility that these arrangements deliver are in the interests of the group and provide a sound financing structure for the medium term."

Following the deal with its bankers, the car dealership will have access to a revolving credit facility of 53m as well as two loans totalling 157m, White added.

Lookers also released audited accounts yesterday, following the publication of unaudited results at the end of April, confirming it had fallen to a loss of 14.9m in the year to 31 December.

The shortfall compares with a profit of 23m a year earlier and came despite revenue rising 5.9 per cent to 1.78 billion.

Additionally, the group, which had taken various cost-cutting steps, including closure of loss-making businesses, restructuring its franchise network and job cuts, expects 12m of cost savings in the current financial year. Lookers also confirmed that like-for-like car sales for the first three months of 2009 were 7.5 per cent ahead of the market, with the divisions of after-sales and parts continuing to do well.

Chief executive Ken Surgenor said: "We believe that continuing consumer confidence fragility dictates that 2009 will be challenging for the new car market.

"However, the impact of the recently announced scrappage scheme should ultimately benefit new car registrations, and we will evaluate and maximise the opportunities that this presents to the full."

Lookers moved into Scotland in February 2003 with the purchase of Taggarts for 5.6m.

Founded by James Taggart and his associate Robert McMillan in 1896, the Scottish business has sites in Glasgow and Motherwell selling a range of marques including Jaguar, and Volvo. For 2008, Lookers posted an adjusted profit before tax of 14m, down 43 per cent on 2007.