31st Oct 2018 11:58
LONDON (Alliance News) - Flooring firm Victoria PLC on Wednesday sought to allay investors fears related to its recently-announced bond issue after shares fell sharply, whilst confirming the debt issue had been granted a BB credit rating by Fitch Ratings.
On Monday, Victoria announced it intended to offer EUR450 million in senior secure notes due 2023. The interest rate is to be determined at the time of the pricing of the offer.
On Wednesday, the firm also sought to "address misleading rumour and speculation" regarding the reasons for the bond issue. This has, the firm explained, resulted in "negative sentiment" towards the firm which have sent its shares falling since the start of the week.
Shares in Victoria were 6.9% lower at 363.00 pence on Wednesday, down 40% since the open Monday.
Victoria emphasised it continued to have a "close and positive relationship" with its lending banks, HSBC Holdings PLC and Barclays PLC. The firm added both were acting as joint global coordinators and bookrunners on the potential bond issue and had been working with them on the matter since April.
The firm said it still operated with "significant headroom" on its covenants under the two-year facility entered into in August.
"As the group has grown over the last six years, our lending banks have been, and continue to be, very supportive of our strategy and performance," Victoria explained in a statement.
"Nevertheless, as our funding requirements have grown over time, various options have been examined to simplify the capital structure and provide long-term financing for the group, and in early 2018 it was decided that a bond issue would be a suitable fit for the company."
Justifying the move, Victoria explained the bond would be "long term" at five-years before maturity and would come with a fixed rate of interest "which was felt to be prudent given the current outlook for interest rates."
In addition, the bond issue terms would provide it with flexibility to execute on its strategy and achieve its objectives.
The firm reiterated the proceeds from the bond would be used "solely" to refinance its current two-year facilities and to pay related costs.
"It is important to note the proposed Bond issue does not increase the net indebtedness of the company," Victoria added.
Victoria also confirmed Wednesday credit rating agency Fitch has given a BB Stable rating for the bond. A rating decision on the bond from Standard & Poor's is anticipated "shortly".
Victoria added it was unable to provide investors with a market update whilst work on the bond had been in progress. This was in line with regulations within UK securities law.
Alongside the bond issue announcement on Monday, the firm provided a trading update which reported like-for-like sales growth for the six months ended September 29 had "continued to exceed" 3% on the year prior amid "strong" UK & Europe growth.
Victoria warned, however, that margins were expected to be between 1.0 and 1.5 percentage points lower than market consensus forecasts amid increased investment.
The firm explained, however, that "margins are still expected to significantly exceed the prior year due to organic growth and product mix effects from previous acquisitions."
Overall, Victoria said on Monday its year-to-date revenue was on track to exceed market forecasts and its plans to recover margins "in stages" over the following year.
For its year ended March, Victoria generated GBP13.4 million in pretax profit on GBP424.8 million revenue. Earnings before interest, taxes, depreciation and amortisation margins were 15.2%.
Related Shares:
Victoria