£400m bond issue for Stagecoach

PASSENGER transport group Stagecoach has announced the launch of a £400m bond issue to help reduce existing debt.

The company, which is a minority shareholder in Virgin Rail, expects to issue the 10-year bonds – which will have an annual coupon of 4% – on September 29. The joint bookrunners for the issue are Barclays, BNP Paribas and HSBC.

Stagecoach said it intended to use the proceeds of the bonds for general corporate purposes including the repayment of existing debt.

In addition, Stagecoach has irrevocable commitments from banks to extend the duration of its £535m committed, bi-lateral bank facilities to October 2020, which also extends the average duration of the group’s debt.

In due course Stagecoach intends to review its options for the existing £400m of 5.75% bonds, due to mature in December 2016.

Commenting on the issue, Ross Paterson, Finance Director, said: “We are pleased by the successful launch of this bond issue and the continuing support we receive from the debt capital markets. This issue attracted a range of high quality investors, reflecting the group’s good financial position and positive prospects. This bond issue, together with the one-year extension of the bank facilities, ensures that the group continues to have an appropriate mix of long-term debt enabling it to plan and invest with some certainty.”
 

Significant composites acquisition for Meggitt

AEROSPACE supplier Meggitt has strengthened its operations with the acquisition of the composites division of EDAC, formerly known as Parkway Aerospace & Defense, from Greenbriar Equity Group and other associated sellers in a deal worth $340m (£220m).

EDAC produces highly engineered aerospace components for jet engine and airframe applications, with over 85% of revenues in civil aerospace composites.  Key customers include GE, Snecma and United Technologies.

The business has a substantial presence, via multi-year long-term agreements, on high-growth jet engine platforms including the GEnx, Pratt & Whitney PurePower family and LEAP engines.

It has sites in Erlanger (Kentucky), Cincinnati (Ohio) and two sites, one of which is a joint venture with UTC Aerospace Systems, in Saltillo, Mexico.  The joint venture site focuses on the manufacture of secondary aerospace structures.  The business has a combined workforce of 579.

Meggitt said the business case for the acquisition was strong. It said combined with the group’s existing composite activities, this acquisition and the recently announced complementary acquisition of the advanced composites businesses of Cobham would create a world-class franchise in high-growth niche composite components focusing on engine components, secondary structures, ice protection and radomes.

Stephen Young, Group Chief Executive of Meggitt, said: “This business is a rare, scale player in civil engine and other composite parts.  Like the complementary acquisition of the advanced composites businesses of Cobham plc for which the completion process is well underway, this decisively moves our composites strategy forward, and positions us strongly in this key growth area.”   

More optimism from Hummingbird despite continuing losses

BIRMINGHAM-registered gold exploration firm Hummingbird Resources has said it continues to make significant progress on the development of the 1.8Moz Yanfolila Gold Project in Mali, ahead of first gold pour targeted for 2016.

In a statement covering the firm’s interim results, CEO Dan Betts said: “The first half of this year has seen us bring our project in Mali to the construction stage.  Work on the ground has been extensive and we have a clear path to low-cost gold production, with 100,000oz gold due to be produced in the first year.
 
“The high grade Yanfolila Project is a mine capable of turning a profit in a varying gold price environment;  a high margin, high return operation that can generate profit at lower gold prices which presents a perfect project to bring into production in the current market conditions.”
 
He said the group’s focus during the first half had been on optimising Yanfolila’s economics in the lead up to construction in order to maximise the long-term profitability of the venture.

“Our internal examination of the improved geotechnical parameters and production schedule when included in the current financial model indicates meaningful improvements to the economics of the project that we are looking forward to announcing once all the necessary work is completed,” he added.
 
He said he was grateful for the support of shareholders as the firm prepared for the final draw down on its $75m facility with Taurus to begin full scale construction ahead of a targeted first gold pour in 2016.
 
The remainder of the year is set to be a transformational period for Hummingbird as it prepares for the Yanfolila construction.

“I would like to thank our shareholders and partners for their continued support during this period.  With exciting news flow on the horizon and a robust strategy in place to exploit market opportunities to create maximum value for shareholders, I look forward to providing further updates as we continue in our efforts to build an independent mid-tier gold production company,” added Betts.

The H1 results show the firm’s loss before tax reducing to $1.87m.