ClientASX Listed (A$320m market cap) client
The ProjectTo provide independent Board advice and assist management in the refinancing of the client’s A$130m multi-currency secured debt facility and provide additional debt capacity for future growth needs up to A$175m.
Whilst the client was generally happy with their existing bank relationship, the terms and conditions in the facility were overly restrictive.
Despite refinancing the facility only a year prior at a reduced margin, the Board had a strong desire to move to a funding platform more commensurate with the company’s credit quality and ASX top 300 status.
The ObjectivesThe main objectives of the refinancing were:
1. Flexibility: ability to introduce/retire lenders as funding requirements evolve over time;
2. Diversification: diversify funding risk through the introduction of new banking relationships;
3. Competitiveness: achieve competitive terms, conditions and pricing more appropriate for the client’s credit status;
4. Refinancing Risk: reduce refinancing risk by staggering debt maturities;
5. Headroom: allow for future growth needs through additional debt capacity;
6. Multi-currency: provide for the overall limit to be available in the currency determined by the client.
The SolutionMagma Capital prepared a full debt information memorandum providing in-depth details about the business, SWOT analysis, risk mitigants, market comparables and financial analysis to provide potential financiers with all the appropriate information to gain comfort around the credit quality of the business.
Whilst nurturing the existing bank relationship, Magma Capital undertook a tender process with 5 potential financiers which enabled competitive tension not only on pricing, but also terms and conditions. Following initial feedback, terms/conditions and pricing were further improved through additional negotiation.
Once final credit approvals were received, Magma Capital provided a recommendation report to the Board. Following endorsement of the recommendation, Magma Capital assisted both the client and the client’s legal counsel through the documentation and financial close process to ensure no deal or timeline slippage.
||Success||Establish a Common Terms Deed structure which provides for the addition or removal of financiers without requiring the consent of other parties.
||Had the choice of many competitive proposals but chose to move forward with a two bank club deal.
||The facility was split into 3-year and a 5-year tranches.
||The facility was upsized by A$45m to A$175m.
||The facility allows drawdowns in the currencies the company will require.