Network International Holdings Plc business update
Network International Holdings Plc
Business update and announcement of successful refinancing
2nd April 2020
Network International Holdings Plc (LSE: NETW), the leading enabler of digital commerce across the Middle East and Africa, provides a business and financing update.
Balance sheet and successful refinancing
The Group has a strong balance sheet, ending the financial year 2019 with a leverage ratio of 1.6x net debt: underlying EBITDA.
We have successfully refinanced our syndicated lending facility, as previously indicated at the time of our full year results release. The syndicate, which consists of 16 banks both global and regional, was considerably over subscribed, with around half of the facility funded by banks who are new to the syndicate. This is testament to our strong business fundamentals in the current challenging credit environment.
The purpose of the facility is for general corporate use, and in the mid to longer term, to fund growth accelerator projects. The facility is for USD525 million and replaces the Group's USD350 million financing facility, which had a drawn down balance of USD289 million on 31 December 2019. The new facility carries interest rates at similar levels to the previous facility; at current leverage, there is an interest rate of LIBOR +2.2% on the USD tranche and EIBOR +1.95% on the AED tranche. Financial covenants remain the same as the previous facility, at 3.5x net debt: underlying EBITDA*. The facility has a tenure of six years, with repayments commencing in 2022. Capitalised fees associated with the previous facility will be reflected as an impairment charge to the income statement of approximately USD7 million in 2020.
*The net debt definition does not include overdraft facilities used to fund settlement related working capital requirements
Business operations update
We have continued to assess the impact of COVID-19 in recent weeks and actioned plans to protect the safety and wellbeing of our colleagues and customers. We made an early and phased implementation of working from home across the business, which has enabled a seamless transition in working practices. With the investments we have made in our technology platforms over recent years and the dedication of our teams, our business operations, processing and payments activities continue to operate as normal. We are also committed to supporting our customers, particularly SMEs, who we have offered reduced merchant fees, support in transitioning their businesses online, and USD1 million in cash to 1000 small merchants who have been particularly impacted.
As previously announced, COVID-19 is affecting global travel and spending patterns. In recent days, social distancing and lock-down measures have been implemented in a number of our markets, similar to those that have been put in place internationally. As a result, our Merchant Acquiring volumes in a number of segments have been significantly impacted. We expect our Issuer Solutions business to be more resilient, with a proportion of fixed revenue contracts that will cushion the impact from lower volumes.
Cashflows and management actions
Given the uncertainty surrounding the length of the COVID-19 impact, we are currently taking actions to reduce operational expenses across the business without reducing headcount; we are committed to supporting our people and believe they are the core driver behind our successful business. We will also be selective about the choices we make and the timing of capital expenditure, as a sensible and precautionary approach to managing cashflows.
Dividend
In addition to these mitigating steps, we believe it is prudent to defer the payment of a dividend in respect of the 2019 financial year, until we have greater clarity on the operating environment.
Conclusion
Alongside the actions we are taking to protect the business in the current environment, we have stress tested our business outlook. Even in a prolonged COVID-19 scenario, we would retain significant liquidity with our currently available facilities.
We are a diversified payments business operating across the acquiring and issuing value chain, as an essential partner to over 70,000 merchants and 200 financial institutions, throughout the Middle East and Africa. The business has a highly successful track record, having operated for twenty five years in the region, with consistent high growth in volumes. We remain confident in our ability to navigate through this period and the long term fundamentals remain strong, supported by secular tailwinds of cash to digital payments conversion across our regions.
Network International plans to release a Q1 2020 trading statement on 30th April 2020.
Investor Relations enquiries
Network International InvestorRelations@Network.Global
Amie Gramlick, Head of Investor Relations
Media enquiries
Finsbury Network-Lon@Finsbury.com
Andy Parnis, Rob Allen
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