Enterprise Inns secures £220m refinancing

By John Harrington, M&C Report

- Last updated on GMT

Related tags: Like-for-like net income, Bnp paribas

Enterprise Inns, the tenanted and leased pub company, has announced that it has secured a £220m refinancing package to commence on the expiration of its existing facilities on 16 December 2013.

The company has arranged a Forward Start Facility (FSF), whereby financing is arranged before existing facilities are due to expire. The facility is split into three tranches, with Facility A (£70m) expiring on 15 December 2015 and Facilities B (£75m) and C (£75m) expiring on 15 June 2016.
In a statement, Enterprise said FSF “will allow the company to follow its strategy of bank debt reduction, which has seen the group reduce its facilities from £1.1bn in 2008 to a current level of £446m of which £389m is drawn net of cash.
“The size of the FSF is based on the company’s strong cash generation and the disposal plan as set out in our half year results statement of 15 May, in which the company stated that for the year to September 2012 it expects to deliver total disposal proceeds of around £200m, followed by a further £150m next year.”
Enterprise said it secured “competitive” pricing for the FSF, with initial margins commencing at 5% over Libor on Facility A and 4.5% over Libor on Facilities B and C. “The financial covenants include net debt to EBITDA and interest cover at the same levels as the existing facility and a fixed asset cover of 1.33 times.”
During the period to 16 December 2013, the firm will incur an incremental interest charge of 100bps on £220m of its existing facilities, resulting in an estimated incremental interest cost of £0.8m in the year to September 2012 and £2.2m in the year to September 2013.
“Once tranche B of the existing facility is fully repaid there will be no restrictions upon the company’s ability to pay dividends,” Enterprise added.
Ted Tuppen, chief executive of Enterprise, said: “We are very pleased to announce the signing of our Forward Start Facility, which reinforces the support of our banking group and demonstrates the proactive steps we have taken to address the financing plans for the business.
“The successful signing of this facility allows us to focus on further improving the operational performance of the business and delivering long term value to our shareholders.”
Last month, Enterprise reported a 5% rise in pre-tax profit to £64m in the six months to 31 March on the back of a rise in like-for-like net income in its substantive estate. Like-for-like net income across the total estate fell 1.6%, against a 5% fall in H1 2011, the tenanted and leased pub operator said. But in the substantive estate, like-for-like income was up 1.5%, against a 1.5% decline in the same period last year.
Average income per pub increased by 3.2%, largely reflecting the trimming of the estate, which stood at 6,143 sites at 31 March.
The new facility was coordinated by Deutsche Bank and the Royal Bank of Scotland with Barclays, BNP Paribas, HSBC, Lloyds Banking Group, Santander and Scotiabank joining as arrangers.

Related topics: Ei Group

Follow us

Pub Trade Guides

View more