4th Apr 2014 10:34
LONDON (Alliance News) - Development Securities PLC Friday said it has restructured its EUR47 million floating rate loan notes and associated hedging and cash collateralisation arrangements, in a move the company says has freed up millions for investment.
The restructure has reduced the maturity of the loan to 7 years from 13 years, resulting in a reduction of GBP800,000 a year in the combined interest, hedging and transaction costs, Development Securities said.
According to the company, the restructure will be finance cost neutral in the year to February 2015 as previously capitalised costs will now be written off, with annual savings of GBP800,000 delivered thereafter.
At 4.9% per annum, the cost of the restructured, unsecured EUR47 million loan notes, including related interest rate and currency hedging arrangements, will be approximately GBP1.9 million a year, Development Securities said.
The loan restructure also has released GBP9.5 million in cash collateral, which Development Securities said is now available for further investment.
"Whilst this source of finance has been useful for the last few years, it was important for us to renegotiate the terms to be more appropriate in today's economic environment," Finance Director Marcus Shepherd said in a statement.
"By structuring revised commercial terms with a maturity reduced to 7 years we have been able to put in place a less capital intensive hedging structure and also deliver annualised finance cost savings. Most importantly, the restructure has released cash collateral, enabling us to invest in new real estate opportunities where we can add value."
Development Securities shares were Friday quoted at 237.00 pence, up 2.9%.
By Samuel Agini; [email protected]; @samuelagini
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