I blogged an entry a little while ago about the issues that some companies will have based on the knock on effect from the global financial crisis. Several companies have revolving credit factilities to fund their day to day operations, working capital and forward investment. One of those companies, as previously highlighted, is William Hill.<\/p>\n
Typically these facilities are just fine as you go back to the market when the previous agreement runs out and get funding at the current rate. However, with the serious financial problems in the banking system, William Hill amongst others, are finding that banks just don’t want to lend at all at any rate. Therefore they have had to go to shareholders and ask them for money. Will Hill are asking for \u00a3350m, they have also cut their dividend.<\/p>\n
These sorts of issues are one of the reasons that we are entering probably the most difficult economic period for at least a generation. It’s a bit like being given an umbrella when its sunny only for the umbrella to be taken away when it starts to rain. Just at the moment companies need funding to fulfill their basic needs, the system is rejecting them; even perfectly sounds requests. It’s a huge economic issue.<\/p>\n
It was also interesting to note that William Hill Interactive, basically their web site, produced operating profits of \u00a354.6m, up 7% on the previous year. That’s nearly double Betfair’s profit.<\/p>\n