Hellaby deals blow to bank debt 

Source: ONE News

Hellaby Holdings says it has knocked its core bank debt back by a more than a third to $51 million, from $80 million, over the last six months.

Some of the aggressive debt reduction came from profits in second half but majority was from improving working capital, or inventory levels, and better debtor collections, said managing director John Williamson.

The owner of No 1 Shoe Warehouse, Hannahs, automotive and other industrial assets was collecting debt faster from customers, which meant customer debts were not being funded by bank debt, he said.

Driving down bank debt without selling many assets was a "very, very good achievement", he said.

"It is very significant, particularly because 18 months ago our core bank debt was close to $120 million," Williamson said.

"We believe we can make further working capital improvements. So logically we can further reduce debt."

This year Hellaby predicted the group's ebitda would likely be around $25 million and tax-paid profit of $5 million for the year to the end of June 30.

Williamson said that with no further announcements since then the inference would be that Hellaby was still on target for a profit.

Full year financial results will be reported on August 27.   

"We find the economy tough at the moment. We are certainly not seeing the green shoots that are being talked about, but we have put a lot of work into improving the operating performance of our businesses in the last six months so we are in better shape than we were six to 12 months ago, irrespective of the economy."

Hellaby has also renegotiated its banking facilities with its principal bank Westpac for a two-year period to 31 July, 2011.