Enterprise Inns plans to slow down disposal programme through £100m bond issue

SOLIHULL pubco Enterprise Inns (ETI) is aiming to raise funds through a £100m convertible bonds offering.

The senior, unsecured guaranteed convertible bonds, due 2020, will provide the firm with low cost, unsecured long-term funding which it says will reduce its overall cost of borrowing and provide it with increased flexibility and enhance prospects for growth.

ETI says the offering will allow it to reduce the current level of pub disposals, focusing on the disposal of under-performing assets and maximising returns for shareholders by the reinvestment of disposal proceeds into trade generating capital expenditure schemes designed to drive like-for-like growth across the business.

ETI chief executive Ted Tuppen said: “During the past four years, we have reduced the overall level of debt by over £1bn, partly funded by cash generated from operations and the balance through disposals.

“As the quality of our pubs has improved, we have also moved towards delivering like-for-like income growth across the whole estate. The offering will bring to an end the use of disposal proceeds for debt reduction and allow us to drive real growth in the business.”

The bonds will be issued by Enterprise Funding Limited, a wholly-owned subsidiary of ETI incorporated in Jersey and will be guaranteed by ETI.

The bonds will have a maturity of seven years, will be issued and redeemed at par and are expected to carry a coupon of between 3.50% and 4.00% per annum payable quarterly in arrear.

The bonds will be convertible into ordinary shares of ETI.