Victoria revisits bond issue, shaken but not stirred

Flooring specialist Victoria plans to refinance through the offer of €330m (£300m) in secured notes.

The Kidderminster-based business wants to fix its debt until 2024 to help it maintain operational flexibility and support the company’s long-term growth strategy.

It said net proceeds will be used to repay existing bank debt and would not increase net debt.

Last November Victoria threw out plans to raise €450m (£400m) in a bond issue after it was carpeted by investors.

Shares in the floorcoverings business fell by 35% in two days last week, wiping more than £260m off its market value, after it revealed plans to refinance. It has only recovered half of that fall in the subsequent nine months.

At the time chairman Geoff Wilding blamed poor communication for spooking investors.

However it now believes the timing is right. It told the stock market that “as like-for-like revenue growth continues in both our soft flooring and ceramic tile businesses and, with the successful completion of the major integration and synergy projects begun last year, margins have increased by more than 100bps compared to the year ended 30 March 2019”.

Last week Victoria revealed a sixth-consecutive year of of growth in underlying earnings and free cash flow per share, and operating margins. Revenues were up 35% to £574m.

In the company’s preliminary annual results, Victoria said it had flexibility to replace a proportion of its long-term debt financing in the bond market.

It added: “The company believes that the bond market, which offers a deep additional pool of funding, and the terms of the notes, which are customary for an issuance of this nature, will allow it to maintain operational flexibility and support its long-term growth strategy.”