Shepherd Neame Ltd - NEW FINANCING STRUCTURE
RNS Number : 9015F
Shepherd Neame Limited
31 October 2018
 

 

NEW FINANCING STRUCTURE

Private placement issued and facilities extended to take advantage of long term growth prospects

Shepherd Neame, Britain's oldest brewer and owner and operator of 321 pubs in Kent and the south east, today announces a new and extended financing structure to support the business for the long term and to take advantage of any opportunities that may arise over the next few years.

The new structure gives the Company £107.5m of committed long term facilities and is attractive because it provides:

·      Certainty of funding as the business looks for growth. Major infrastructure and housing development is forecast to take place in the company's heartland between now and 2030 and Kent's population is anticipated to grow by 20% in that time. The company has recently agreed to build a new pub hotel in Castle Hill in the Ebbsfleet Garden City development zone and anticipates further opportunities will arise in the medium term.

·      A lower rate of interest than the debt being replaced

·      An improved debt maturity profile with a revolving credit facility expiring in 2023, and private placement expiring in 2038

·      New debt partners who share and support our long-term focus and strategy

Specifically, the key features of this new financing structure are:

·      A private placement raising £35m. BAE Systems Pension Funds Investment Management Ltd ("BAE Pension Fund"), who support many long term strategic businesses, 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 EBITDA¹ was 3.0 times at the balance sheet date.

·      A new five-year revolving credit facility of £50m with Lloyds Bank plc and Santander UK plc. This matures in 2023 replacing the existing facility of £45m that was due to expire in 2020. The terms of this facility are LIBOR2 plus bank margin of between 1.35% and 2.50% 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 2.0%.

In conjunction with this refinancing, an off-balance sheet Directors' valuation3 of our licensed property assets has been undertaken showing a surplus over current book value of £24m. In future, the Board intends to carry out further off balance sheet Directors' valuations of our licensed estate every four years and will report these updates to shareholders at that time.

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

 

Profit before tax pre items excluded from underlying results, net finance costs, depreciation, amortisation, profit or loss on sale of fixed assets excluding property and free trade loan discounts.

2 London Interbank Offered Rate

3 The valuation covers licensed properties only and was carried out by the company's professionally qualified staff on a RICS Red Book basis. A sample of 10% of the property values were independently verified by Savills.

 

31 October 2018

Enquiries:

 

Shepherd Neame

 

Jonathan Neame, CEO

Mark Rider, Finance and IT Director

 

01795 542206

Instinctif Partners

 

Matthew Smallwood

Andy Low

 

020 7457 2020

 

NOTES FOR EDITORS

Shepherd Neame is Britain's oldest brewer. Established in 1698 and based in Faversham, Kent it employs around 1,600 people.

The Company retails its own beers, on draught and in bottles, under a range of highly successful brand names, including:

·      Spitfire: One of the leading premium bottled ales in the UK with national distribution on draught (4.2% abv) and in bottle (4.5% abv). Spitfire Gold, a golden ale on draught (4.1% abv) and in bottle (4.3% abv), was launched to mark the 75th anniversary of the Battle of Britain and Spitfire Lager, the Lager of Britain (4.0% abv), was launched in 2016.

·      Bishops Finger: Connoisseur premium ale (5.4% abv). 

·      Whitstable Bay: This range, sold under the Faversham Steam Brewery brand, includes a Pale Ale on draught (3.9% abv) and in bottle (4% abv), an Organic Ale (4.5% abv), Blonde Lager (4.5% abv), Black Oyster Stout (4.2%) and Red IPA (4.5% abv).

·      Five Grain Premium Lager: introduced 2017 (5% abv).

·      Bear Island East Coast Pale Ale: introduced 2017 on draught (4.8% abv).

·      Orchard View: the Company's first cider brand made in collaboration with Aspalls introduced 2017 (4.5% abv).

The Company also brews lagers under licence, including:

·      Samuel Adams Boston Lager: Leading US craft lager (4.8% abv) brewed under an exclusive licence from the Boston Beer Company. The Company also imports Angry Orchard, America's No. 1 Hard Cider (5%).

Shepherd Neame sold 235,000 brewers' barrels of beer (67.7 million pints) including 196,000 brewers' barrels of own beer (56.4 million pints) brewed by Shepherd Neame in the year to 30 June 2018. The majority of these sales were made in the UK although the Company also exports to more than 35 countries.

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. The pub estate ranges from inns and hotels to destination dining, great traditional and local community pubs.  

Shepherd Neame's shares are traded on the NEX Exchange Growth Market. See http://www.nexexchange.com/ for further information and the current share price. 

For further information on the Company, see www.shepherdneame.co.uk.


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