Greene King in £350bn bond issue
PUBS and brewing group Greene King has raised £350million of long-term finance through a further securitisation of its pub estate. The investment grade bonds, backed by Greene King's extensive real estate, represent a lower-cost form of long term finance and the funds raised will be used to pay off part of the group's existing bank facilities.
PUBS and brewing group Greene King has raised £350million of long-term finance through a further securitisation of its pub estate.
The investment grade bonds, backed by Greene King's extensive real estate, represent a lower-cost form of long term finance and the funds raised will be used to pay off part of the group's existing bank facilities.
Alongside the launch of the new bonds, the company has also simplified its bank borrowing facilities to a four-year facility of £400million which it said would provide “enhanced headroom”.
Greene King said that both transactions had been completed in an “extremely tough” trading and lending environment and were “testament to the quality of the Greene King estate, security of its cash flows and strength of its business model”.
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The “tap issue” of bonds - arranged and placed by Royal Bank of Scotland - involves pubs from the Belhaven, Hardy's & Hanson's and New Century Inns estates which have been acquired by Greene King over the past three years.
Greene King chief executive Rooney Anand said: “The fact that we have been able to launch successfully and price attractively a tap of a pub securitisation in difficult debt markets demonstrates the quality of the Greene King estate and strength of the Greene King covenant.
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“Going forward, the increased headroom and the strength and efficiency of our capital structure give us a platform to continue to invest in the business, to maintain flexibility within our pub estate and to be alive to any additional opportunities to enhance shareholder value.”
Greene King announced its first securitisation in March 2005, involving a total of £600million of bond finance securitised on just under half of its then estate.
The move followed the group's acquisition of the Laurel pub company's neighbourhood estate in August 2004 which had initially been financed by a short-term loan facility.
Its total securitisation now amounts to £1.45billion representing 2,035 pubs, around 80% of the current estate.