Safestore Holdings has announced that it has refinanced its US Private Placement Notes on ‘improved terms’ and has agreed an amendment and extension of its existing bank facilities to extend the average maturity and lower the cost of the Group’s debt financing.
Under the refinancing, the existing $65.6m 5.83%1 2019 US Private Placement Notes and $47.3m 6.741 2024 US Private Placement Notes will be repaid in full., while new Euro and Sterling denominated US Private Placement Notes will be issued with the following tenor and coupons:
- €50.9m 7 year notes at coupon of 1.59%
- €74.1m 10 year notes at coupon of 2.00%
- £50.5m 12 year notes at coupon of 2.92%
Furthermore, the existing UK and Euro revolving credit facilities are being extended by two years from June 2020 to June 2022 with an option (on an uncommitted basis) to extend for a further year with the existing £126m term loan cancelled. The amended facilities will comprise a £190m revolving credit facility of which c.£120m will be drawn and a €70m revolving facility of which c.€46m will be drawn. Safestore says that the margin on the amended facilities will be reduced by 25 bps from 150 bps to 125 bps and that the non-utilisation fee on the undrawn facilities reduces from 0.6% to 0.5%. The Group also has the option (on an uncommitted basis) to increase the quantum of the sterling revolving credit facility by £60m.
The Group says that it will pay a ‘make-whole’ payment to existing US Private Placement Notes noteholders of circa £12.5m and will also break the Sterling/ Dollar cross-currency swap relating to the existing USPP notes which has a current mark-to-market value of circa £13m in favour of the Group.
Safestore says that, based on the current level of borrowings and interest swap rates, and taking into consideration the amortisation of initial fees, the Group’s pro forma annual underlying finance charge will, over a full year, reduce by circa £3m per annum and the Group’s overall ongoing average cost of debt, including the US Private Placement Notes, will reduce by c. 120 bps to 2.4%. The weighted average maturity of the Group’s debt increases from 3.4 years to 7.5 years. Safestore say that it is estimated that the Group’s LTV ratio will be circa 33% (calculated by reference to the 31 October 2016 portfolio valuation) after the above transactions are completed.
The US Private Placement Notes will be issued to insurance company affiliates of AIG, Inc. and the bank facilities are provided by a syndicate of RBS, HSBC, Lloyds, Santander and BRED. It is expected that the new debt arrangements will come into effect on 31 May 2017.
Safestore refinances US Private Placement Notes on ‘improved terms’ : SAFE