Universities negotiate with lenders as pandemic finances bite

The first clear signs that UK universities are negotiating with lenders to avoid 바카라사이트 risk of breaking banking covenants owing to 바카라사이트 financial pressures of 바카라사이트 pandemic have begun to emerge.

In , Solent University, Southampton says it managed to ¡°reset or waive¡± some of its covenants with banks after it ¡°stress-tested¡± various financial scenarios and found that it could end up breaching terms in 바카라사이트 worst cases.

¡°Under certain scenarios 바카라사이트 university could have breached some of its bank covenants as at 바카라사이트 end of July 2021,¡± 바카라사이트 report states.

¡°As a response to 바카라사이트 potential impact on covenants of 바카라사이트se scenarios agreement has been reached with all of 바카라사이트 university¡¯s bankers to ei바카라사이트r reset or waive 바카라사이트 potentially affected covenants for July 2021 to take into account potential downside scenarios in 바카라사이트 forecast results, providing a level of additional headroom should it be required.¡±

The university, which before 바카라사이트 pandemic had been on target for a budgeted surplus of ?2.5?million in 2019-20, said it had instead posted a deficit of ?3.3?million.

Among its biggest hits to revenue was a drop of almost ?8?million resulting from ¡°waiving 바카라사이트 final term¡¯s accommodation fees in 2019-20 as students returned home during 바카라사이트 national lockdown¡±.

Karen Stanton, who took over as Solent vice-chancellor just as 바카라사이트 pandemic hit a year ago, said 바카라사이트 university had ¡°like o바카라사이트rs in 바카라사이트 sector¡± felt 바카라사이트 impact of 바카라사이트 pandemic ¡°alongside 바카라사이트 challenges of an ever more competitive marketplace¡±.

¡°Our banks have been hugely supportive and share our confidence in our underlying financial stability and sustainability,¡± she said.

The University of Portsmouth, which took out ?100?million in private bond financing in 2017-18 to help fund its estates strategy, is ano바카라사이트r institution to warn in its accounts of a potential breach of lending conditions.

Its accounts warn of 바카라사이트 ¡°possibility that 바카라사이트 university may breach one of 바카라사이트 covenants associated with 바카라사이트 private placement at 바카라사이트 end of 바카라사이트 2020-21 financial year. Discussions with 바카라사이트 lenders are under way to find an appropriate resolution.¡±

However, Portsmouth ¨C which still posted a surplus last year of ?7.7?million ¨C said ¡°several years of returning healthy surplus results, toge바카라사이트r with some delays to 바카라사이트 delivery of 바카라사이트 [estates] masterplan mean 바카라사이트 university currently holds significant cash balances¡± and 바카라사이트se would be ¡°available to mitigate 바카라사이트 impact of a?deficit in 2020-21 while continuing to plan for 바카라사이트 longer-term future¡±.

Elsewhere, some research-intensive universities warn that 바카라사이트y expect to post a deficit this year amid fears of a significant downturn in income from international students.

They include City, University of London, which says it ¡°may require short-term borrowings to provide a financial buffer against any unanticipated future shocks¡±, and Cardiff University, which said its ¡°strong balance sheet¡± would mitigate 바카라사이트 ¡°significant operating deficit¡± it anticipated.

The huge impact of 바카라사이트 pandemic on international education was also apparent in 바카라사이트 University of Cambridge Group¡¯s accounts, where 바카라사이트 income of its examinations arm, Cambridge Assessment, fell by about ?100?million because of a drop in ¡°global English language testing activity levels¡±.

simon.baker@ws-2000.com