27 June 2017
Refinancing on improved terms
McBride plc ("the Group"), the leading European manufacturer and supplier of Co-manufactured and Private Label products for the Household and Personal Care market, today announces the refinancing of the Group in further support of the Group's Repair, Prepare, Grow strategy.
The Group has secured replacement banking facilities from a panel of international banks and using these increased facilities will repay its US Private Placement Notes ("USPP"). These actions will lower the cost of the Group's debt financing from the financial year starting on 1 July 2017 by approximately £2.0m per year.
Replacement Bank Facilities
The existing EUR 140m multi-currency revolving credit facility ("RCF") has been increased to a five year EUR 175m facility with a maturity of June 2022.
Features of the replacement facilities include:
- a EUR 175m RCF of which approximately EUR 70m will be drawn, providing the Group with significant committed funding headroom
- a 5 bps reduction in both margin and non-utilisation fees
- the addition of further borrowing entities and currencies, increasing flexibility going forward
- a EUR 75m uncommitted accordion feature will provide additional facilities for potential future acquisitions in support of the Grow phase of our strategy
The bank facilities are provided by a syndicate of HSBC, KBC, Bayern LB, BNP Paribas and Barclays.
US Private Placement Notes
The existing $50m 5.51%1 2020 USPP and $40m 5.38%1 2022 USPP will be repaid in full by drawing on the increased RCF.
Under the terms of the USPP arrangements, the Group will pay a 'make-whole' payment to existing USPP note-holders of approximately £11m2. At the same time the Group will close out the Euro/Dollar cross-currency interest rate swaps relating to the existing USPP notes which have a current mark-to-market net value of approximately £11m3 in favour of the Group.
Based on the current level of borrowings and interest swap rates, and taking into consideration the amortisation of initial fees, the Group's pro forma annual underlying finance charge will, over a full year, reduce by approximately £2m4 per annum. The Group's overall ongoing average cost of debt, after the repayment of the USPP, will reduce by approximately 310bps 4 to 150bps.
The 'make whole' payment to USPP note-holders will be treated for the Group's financial statements for the 12 months to 30 June 2017 as an exceptional finance charge. The total exceptional finance charge associated with this transaction will be approximately £13m comprising the make whole payment and additional USPP closure costs.
Following completion of all the transactions surrounding this change, which are expected by 30 June 2017, the impact on the Group's current net debt level will remain broadly unaffected.
Chris Smith, Chief Financial Officer of McBride, commented:
"As we prepare for the Grow phase of our strategy, we have secured an improvement in the cost, flexibility and duration of our banking facilities. The completion of this exercise represents another important milestone in the delivery of Repair, Prepare and Grow and reflects the strong ongoing support from our chosen banks."
1 - Adjusted for the impact of cross currency swap agreements.
2 - Will be treated as exceptional finance costs. Value estimated as at 23 June 2017.
3 - Will be treated as a movement on the derivative already reported in our income statement. Value estimated as at 23 June 2017.
4 - As compared to the position at 30 June 2016
For further information please contact:
Chris Smith, Chief Financial Officer
0161 203 7570
Ed Bridges, Nick Hasell
020 3727 1017
Note: This announcement contains inside information which is disclosed in accordance with the Market Abuse Regulation which came into effect on 3 July 2016.