8th Jul 2005 11:30
Wolverhampton& Dudley Breweries PLC08 July 2005 8 July 2005 THE WOLVERHAMPTON & DUDLEY BREWERIES, PLC Debt Refinancing As announced in the Interim Results in May, The Wolverhampton & DudleyBreweries, PLC ("W&DB", and together with its subsidiaries the "W&DB Group" or "the Group") has been reviewing the most appropriate long-term financingstructure for the Group. W&DB has concluded that, in line with other companiesin the pub sector, a securitisation together with a bank facility is thepreferred solution to its future financing arrangements. W&DB therefore proposesa major refinancing of its Group debt via a securitisation of at least £530m andup to £805m backed by a part of the Group's managed and tenanted pub estate. Itis intended that the proceeds of the securitisation will be used to repay W&DB'sexisting bank debt and fund the redemption or exchange of the Group's six seriesof existing debentures ("Existing Debentures"). In addition, in order to retainflexibility, W&DB also proposes to put in place a new bank facility of at least£250 million. Any excess proceeds that may be raised from the refinancing willbe used for general corporate purposes. It is anticipated that the refinancingwill be completed in this financial year. Today the W&DB Group is posting a Consent Solicitation Document to all holdersof its six debentures setting out the proposed terms of the redemption andexchange and seeking their respective consents. Paul Inglett, Finance Director, said: "This proposed refinancing of our existingdebt will reduce interest costs and is consistent with our strategy of retainingthe high quality freehold asset base of the business, whilst providing greaterflexibility for further development." Rationale The W&DB Group currently has a range of debt financing in place, comprising bankfacilities and Existing Debentures. The proposed refinancing will include asecuritisation of between £530m and £805m secured by up to 70% (by number ofpubs) of the W&DB Group's managed and tenanted pubs ("Securitisation"), theredemption or exchange of the Existing Debentures and the repayment of W&DB'sexisting bank facilities. The new financing structure will allow the W&DB Groupto: • refinance its bank debt and Existing Debentures; • utilise the credit strength of its high quality pub portfolio; • reduce its weighted average cost of debt; • lengthen the Group's debt maturity profile; • simplify the Group's overall financial structure; and • retain sufficient financing flexibility for the future. The actual one-off cost and the ongoing benefits of the proposed refinancingwill be dependent on the outcome of the Consent Solicitation process, theunderlying interest rates prevailing at the time of completion and the actualcredit spreads achieved in the Securitisation and will be confirmed nearer tothe completion of the transaction. Securitisation The proposed securitisation structure is expected to be in line with comparableprior transactions in the pub sector. On the assumption of a proposedsecuritisation of £805m, the debt structure will comprise four classes of notes(A1, A2, A3 and B) issued by W&DB Issuer PLC, a special purpose company. W&DBexpects that the Class A1, Class A2 and Class A3 Notes will be rated A and theClass B Notes will be rated BBB. The initial Net Debt/EBITDA ratio on the seniortranches (Class A1, A2 and A3) is expected to be approximately 5.7x, compared toapproximately 7.0x on the Class B tranche. The securitisation debt will be fullyhedged, utilising the W&DB Group's existing swaps as well as new hedgingarrangements. An independent portfolio valuation has been performed for 1,592 pubs from the W&DB Group estate which could be allocated to the Securitisation, depending on thefinal amount of the Securitisation. The value of these pubs is £1.17bn, which isconsistent with management's expectations. Consent solicitation W&DB, Mansfield Brewery Limited and Burtonwood Group Limited have publishedtoday a Consent Solicitation Document as part of the refinancing plan containingproposals seeking the consent of the holders of the Existing Debentures to: • redeem the two existing shorter-dated debentures, totalling £35m, forcash ("the Redemption Offer") • exchange the four longer-dated debentures, totalling £210m, into newsecuritisation notes or for cash ("the Exchange Offer") The Consent Solicitation Document may be obtained on request from The Royal Bankof Scotland plc who are acting as the Group's Consent Solicitation Agent. Following receipt of the results of the debentureholder votes, W&DB willannounce its course of action with regard to the redemption and exchange of theExisting Debentures and the final size and structure of the Securitisation. Proposed Terms of the Redemption Offer The holders of Mansfield's 2010 Debenture and W&DB's 2012 Debenture (the "Shorter Dated Debentures") whose debentures are redeemed pursuant to theproposal will receive an amount in cash ("Debenture Redemption Price"). TheDebenture Redemption Price will be based on the yield to maturity of therelevant benchmark security plus the relevant Redemption Spread as set forth inthe table below. In addition, holders of the Shorter Dated Debentures will havean opportunity to receive an Early Solicitation Fee as set forth in the table. Redemption Pricing Table Debenture Series Nominal amount Benchmark security Redemption Spread Early Solicitation Fee (over relevant benchmark (% of the nominal amount of security) debentures) Mansfield 2010 £20m UKT 4.75% 2010 0.575% 0.25%W&DB 2012 £15m UKT 5.00% 2012 0.625% 0.30% Proposed Terms of the Exchange Offer The holders of W&DB's 2019 Debenture, Burtonwood's 2024 Debenture, W&DB's 2027Debenture and Mansfield's 2028 Debenture (the "Longer Dated Debentures") whosedebentures are exchanged pursuant to the proposal will receive either (a) ClassA2 or A3 Notes issued in the Securitisation ("New Fixed Rate Notes") or (b)cash, in each case having a value equal to the Exchange Debenture Price. TheExchange Debenture Price will be based on the yield to maturity of the relevantbenchmark security plus the spread on the relevant New Fixed Rate Note ("NewFixed Rate Note Spread") and an additional fixed spread ("Fixed Differential")as set forth in the table below. The New Fixed Rate Note Spread will bedetermined on the Pricing Date and will be set at the same levels at which theNew Fixed Notes are being sold to third party investors who are not holders ofLonger Dated Debentures. In addition, holders of the Longer Dated Debentureswill receive the Exchange Fee and have an opportunity to receive the EarlySolicitation Fee set forth in the table, both of which are expressed as apercentage of the nominal amount of debentures exchanged. Exchange Pricing Table Debenture Series Nominal Benchmark Fixed Differential Early Exchange Fee Fixed amount security Solicitation Differential Fee net of fees (over New Fixed (% of the nominal amount of (over New Fixed Rate Note Spread) debentures) Rate Note Spread)W&DB 2019 £125m UKT 8.00% 2021 0.185% 0.50% 0.60% 0.075%Burtonwood 2024 £25m UKT 5.00% 2025 0.175% 0.60% 0.60% 0.075%W&DB 2027 £30m UKT 6.00% 2028 0.175% 0.60% 0.60% 0.075%Mansfield 2028 £30m UKT 6.00% 2028 0.175% 0.60% 0.60% 0.075% There are a number of potential benefits for holders of Longer Dated Debentureswho elect to receive New Fixed Rate Notes under the Exchange Offer including; • an investment grade credit rating of 'A' on the New Fixed Rate Notes; • lower refinancing risk due to an amortising debt profile; • greater reporting transparency and disclosure; • inclusion in major credit indices; and • greater liquidity. ABI committee The terms of the Redemption Offer and the Exchange Offer have been considered bytwo separate Special Committees of the ABI, one in respect of the impact of theExchange Offer and one in respect of the impact of the Redemption Offer. Themembers of the Special Committees, representing 38% by nominal value of theExisting Debentures, have informed W&DB that they find the proposals acceptable,that they intend to vote in favour of the Extraordinary Resolutions in respectof their holdings and that they will be inviting other members of the ABI toconsider a similar course of action. Meetings Separate meetings are being convened on 1st August for the purposes of enablingthe holders of the different series of Existing Debentures to consider and, ifthey so wish, to vote to pass the Extraordinary Resolution applicable to theirseries of Existing Debentures. The deadline for submission of votes in order toqualify for the Early Solicitation Fee is 5:00pm on 22nd July 2005. Contact details The Wolverhampton & Dudley Breweries, PLC Ralph Findlay, Chief Executive 01902 329 516 [email protected] Inglett, Finance Director 01902 329 516 [email protected] The Royal Bank of Scotland plc (Solicitation Agent) All questions from bondholders should be directed to The Royal Bank of Scotlandplc. Andrew Burton 020 7085 8056 [email protected] Jackson 020 7085 4208 [email protected] NM Rothschild & Sons Limited (Financial Adviser to W&DB) Kenneth White 020 7280 5701 [email protected] Smyth 020 7280 5719 [email protected] gcg hudson sandler (PR Adviser to W&DB) Andrew Hayes 020 7796 4133 [email protected] Lyon 020 7796 4133 [email protected] Important Notice The contents of this press release have been prepared by and are the soleresponsibility of the W&DB Group. This press release does not constitute anoffer to sell or the solicitation of an offer to buy securities of W&DB,Mansfield Brewery Limited, Burtonwood Group Limited or W&DB Issuer PLC. Nothingin this press release constitutes advice on the merits of buying or selling aparticular investment or exercising any right conferred by the securitiesdescribed. Any investment decision as to any purchase of securities referred toherein must be made solely on the basis of information contained in the finalform of the Offering Circular and no reliance may be placed on the completenessor accuracy of the information contained in this press release. Securities are not suitable for everyone. The value of securities can go down aswell as up. You should not deal in securities unless you understand their natureand the extent of your exposure to risk. You should be satisfied that they aresuitable for you in the light of your circumstances and financial position. Ifyou are in any doubt you should consult an appropriately qualified financialadvisor. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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