The Viva Leisure Ltd (ASX: VVA) share price is surging despite no price-sensitive news having been released by the company today.
However, less than 2 hours before the ASX closed yesterday, Viva Leisure released an update to the market.
The update outlined the Commonwealth Bank of Australia‘s (ASX: CBA) decision to defer its formal review of Viva Leisure’s financial performance.
Additionally, some of its New South Wales health clubs will soon be able to reopen.
While the update wasn’t price sensitive, the market has seemingly reacted favourably nonetheless.
Right now, the Viva Leisure share price is $1.91, 16.46% higher than its previous close.
Let’s take a closer look at Viva Leisure’s recent update.
Viva’s market update
The Viva Leisure share price is soaring today, potentially spurred by a market update released by the company yesterday afternoon.
Then, the company announced CBA has agreed to defer its formal review of financial covenants until March 2022. The bank agreed to the deferral at the request of Viva Leisure.
In its financial year 2021 results, Viva Leisure noted it had agreed to new credit terms for a debt facility with CBA worth approximately $35 million during the financial year just been.
The facility comprises a $25 million Market Rate Loan facility – which was drawn to $10 million at the time of Viva Leisure’s earnings release – a bank guarantee facility, and a direct debit facility.
Additionally, Viva Leisure announced 20% of its NSW portfolio will be allowed to reopen from 11 September.
The news followed the NSW Government’s decision to lift COVID-19 lockdowns in regional parts of the state.
The reopening will see the doors of 7 of Viva Leisure’s businesses unlocked. However, they will still face certain restrictions.
Viva Leisure share price snapshot
Despite today’s uptick, the Viva Leisure share price is still firmly in the ASX red.
Right now, its share price is 35% lower than it was at the start of 2021. It has also fallen 21% since this time last year.
The post Why the Viva Leisure (ASX:VVA) share price is surging 16% today appeared first on The Motley Fool Australia.
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More reading
- Viva Leisure (ASX:VVA) share price sinks 7% on capital raising efforts
Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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