2nd Mar 2005 11:16
Greene King PLC02 March 2005 2 March 2005 Greene King plc announces the terms of its £600m securitisation Greene King's acquisition of the Laurel Neighbourhood Estate in August 2004 (theAcquisition) was funded by a short-term loan facility. In keeping with itsintention at the time, Greene King has since developed its debt financingstrategy. The aim has been to provide the company with the flexibility tocontinue to invest and enhance shareholder income whilst taking advantage oflonger-term, lower-cost, more leveraged bond finance. The approach followed has been to put in place £600 million of bond finance,securitised on just under half of its pub business, alongside the £605 millionof syndicated loan and other facilities currently in place, linked to theremaining business, of which £463 million is currently drawn. The bond financehas today been priced at advantageous rates, and it is expected that thetransaction will be completed next week, when the funds raised will be used tore-pay the short-term loan facility. The transaction priced at the followinglevels: Tranche Rating Type Amount PriceA1 A/A FRN £150m Libor + 38bpA2 A/A Fixed £320m 5.318%B BBB/BBB Fixed £130m 5.702%Total £600m There has been an excellent response from investors towards the bonds beingoffered, backed by Greene King's trading record, its strong freehold pub assetsand the innovative structure which for the first time in a securitisationprovides flexibility to transfer pubs between managed and tenanted formats. Thebond finance has been arranged by The Royal Bank of Scotland plc. Long-term interest rates have reduced since the Acquisition and accordingly thebonds are priced at a lower level than could then have been achieved. Howevercertain fixed-rate swaps taken out at the time of the Acquisition are now beingcancelled, giving rise to a one-off exceptional cost of around £9.2 million, netof tax. Overall there will be a saving in interest costs going forward of around£6 million per annum. Michael Shallow, finance director, says: 'This has been a successful, innovative financing exercise, achieved atattractive interest rates for Greene King. Going forward the strength andefficiency of our capital structure gives us the flexibility to continue toinvest in the business, to maintain flexibility in our pub estate and enhanceshareholder income.' For further information: Greene King plc01284 763222Tim Bridge, Chief ExecutiveMichael Shallow, Finance Director Financial Dynamics020 7831 3113Ben Foster This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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