St. Modwen completes refinancing with new £475m facility

The FTSE 250 company said the unsecured revolving credit facility replaced £488m of current bilateral secured debt facilities.

In line with its strategic plans, the company said the refinancing would provide a reduced cost of debt and improved operational flexibility.

Transitioning to unsecured debt financing would provide 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, the board explained.

As part of the transaction, the company has cancelled interest rate swaps at a cash cost of £6m on completion, which would result in initial annual savings of £2.5m.

A non-cash expense of an estimated £4m would be recognised in the first half of the Company's 2018 financial year in respect of capitalised arrangement fees relating to the previous facilities.

Based on drawn group net debt of around £440m as at 30 November, St. Modwen's pro forma all-in cost of debt would reduce by 50 basis points from 4.2% to 3.7%.

Debt maturity would 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 consists of the company's existing banking group, being Barclays, HSBC, NatWest and Santander UK, in addition to the introduction of AIB Group.

St. Modwen said it was advised on the refinancing by Rothschild & Co.

“This refinancing represents a key achievement that is in line with our strategic priorities of portfolio focus and capital discipline,” said chief financial officer Rob Hudson.

“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.”