Shepherd Neame has announced a new and extended financing structure giving it access to £107.5m, which allows it to “take advantage of any opportunities that may arise over the next few years”.

The new structure comprises a new five-year revolving credit facility of £50m with Lloyds and Santander. This matures in 2023, replacing the existing facility of £45m, which was due to expire in 2020.

The terms of the facility are LIBOR2 plus bank margin of between 1.35% and 2.5% depending on the leverage ratio of net debt to EBITDA. The rate of LIBOR on the first £20m of the drawings on this facility has been capped at 2%.

The new structure also includes a private placement raising £35m. BAE Systems Pension Funds Investment Management will receive loan notes at a fixed interest rate of 3.99% for 20 years.

These loan notes replace part of the current term loan that is due to expire in 2026. As a result, £37.5m of this loan has been cancelled and repaid. Swap contracts of £35m associated with this loan have been terminated at a cash cost of approximately £9.4m (£7.6m net of tax). The cancellation of the swaps will have no impact on net asset value per share, but will increase net debt in the short term and lead to an exceptional charge in the current financial year. For the 53 weeks ended 30 June 2018 net debt stood at £74.8m and the leverage ratio of net debt to underlying EBITDA was 3.0 times at the balance sheet date.

In conjunction with the refinancing, an off-balance sheet directors’ valuation of Shepherd Neame’s licensed property assets has been undertaken showing a surplus over current book value of £24m.

Shepherd Neame was advised on its debt refinancing by Rothschild & Co.

At the year end, the company operated 321 pubs, of which 242 were tenanted or leased, 11 were held as investment properties under commercial free of tie leases, and 68 managed.

Topics