Enterprise Inns has announced an offering of approximately £100 million of senior, unsecured Guaranteed Convertible Bonds due 2020 which will provide Enterprise with low cost, unsecured long-term funding, reducing Enterprise’s overall cost of borrowing, providing it with ncreased flexibility and enhancing prospects for growth.
Reducing the level of pub disposals
The Offering will allow ETI to reduce the current level of pub disposals, focusing on the disposal of under-performing assets and maximising returns for shareholders by the reinvestment of disposal proceeds into trade generating capital expenditure schemes designed to drive like-for-like growth across the business.
As a result of the Offering, ETI will not need to draw down the £70 million Tranche A of the Forward Start Facility commencing December 2013, which carries an interest cost of 5.0% – 6.5% over LIBOR, thereby reducing the overall bank facility to £150 million, amortising to £75 million on its maturity in June 2016.
Driving real growth in the business
ETI Chief Executive Ted Tuppen said: “During the past four years, we have reduced the overall level of debt by over £1 billion, partly funded by cash generated from operations and the balance through disposals. As the quality of our pubs has improved, we have also moved towards delivering like-for- like income growth across the whole estate. The Offering will bring to an end the use of disposal proceeds for debt reduction and allow us to drive real growth in the business.”