Property group concludes £475m refinancing deal
Birmingham-based property group, St. Modwen has concluded a major new refinancing deal.
The deal gives the Longbridge company a £475m unsecured revolving credit facility with an initial maturity of five years, which can be extended to a maximum of seven years, subject to lender consent.
The unsecured RCF replaces £488m of current bilateral secured debt facilities.
The group said it was pleased with the deal as it offered a reduced cost of debt and improved operational flexibility, in line with the company’s strategic goals.
Transitioning to unsecured debt financing also provides the company with added flexibility to extend further its debt maturity profile and diversify its sources of unsecured finance ahead of the maturities of its £100m convertible bond and £80m retail bond in March and November 2019 respectively.
As part of the transaction, St. Modwen has cancelled interest rate swaps at a cash cost of c. £6m on completion, which will result in initial annual savings of c. £2.5m. A non-cash expense estimated at £4m will be recognised in the first half of the 2018 financial year in respect of capitalised arrangement fees relating to the previous facilities.
Based on drawn group net debt of c. £440m (as at November 30, 2017), St. Modwen’s pro forma all in cost of debt will reduce by 50bps from 4.2% to 3.7%. Debt maturity will increase from 2.7 years to 4.1 years (or 5.5 years if the two one-year extensions are applied), with options to increase this in the future through further unsecured funding.
The syndicate of lenders for the new facility comprises the company’s existing banking group: Barclays, HSBC, NatWest and Santander UK, in addition to the introduction of AIB Group (UK). St. Modwen was advised on the refinancing by Rothschild & Co.
Rob Hudson, Chief Financial Officer, St. Modwen, said: “This refinancing represents a key achievement that is in line with our strategic priorities of portfolio focus and capital discipline. The successful transition to an unsecured debt structure will provide us with a greater level of financial and operational flexibility to implement our intended business plan at a lower overall cost of finance.”
