Statement re amendment to further extend its debt maturities
February 08 2012 - 1:00AM
UK Regulatory
TIDMSKG
SKG launches amendment to further extend its debt maturities
8 February 2012: Smurfit Kappa Group plc ("SKG" or the "Group"),
one of the world's largest integrated manufacturers of paper-based
packaging products, with operations in Europe and Latin America,
today announced that it is seeking the consent of its lenders to
amend its Senior Credit Facility Agreement.
Overview
As reported in its 2011 fourth quarter results announcement
released today, SKG continues to deliver a strong financial
performance. Within the past 12 months, SKG has materially improved
its financial profile and flexibility, by reducing net debt by
EUR358 million to EUR2.75 billion, while maintaining a strong
liquidity position and diverse funding sources. To further
strengthen its capital structure the Group is now seeking the
consent of its lenders to amend its Senior Credit Facility
Agreement.
The proposed amendments will further increase SKG's financial
flexibility, providing it with:
-- Extended maturity of its Senior Credit Facility
-- Increased ability to raise longer-dated capital to refinance a portion
of its existing Senior Facilities
-- Flexibility to efficiently refinance its Senior Subordinated Notes Due
2015
Lenders under Term Loans B and C who agree to extend will be
offered a 20% cash prepayment at par to be funded from cash on
balance sheet.
A significant number of the Group's top lenders have already
confirmed their support for all of the proposed amendments and
maturity extension.
Smurfit Kappa Group's Chief Financial Officer, Mr Ian Curley,
commented: "In the last 12 months, our strong cash flow generation
delivered net debt reduction of EUR358 million to EUR2.75 billion,
exceeding our stated net debt reduction target. Our net debt to
EBITDA ratio reduced to 2.7x at the end of 2011, and our clear
objective is to maintain that ratio below 3.0x through the cycle.
The proposed amendments to our Senior Credit Facility form part of
an ongoing process of efficient capital structure management, and
will provide us with an extended debt maturity profile and
significantly enhanced financial flexibility."
Amendments to Senior Credit Facility Agreement | Summary
Details
The principal requested amendments to SKG's Senior Credit
Facility Agreement ("SCF") are:
(i) Extend the maturity of the Group's existing Term Loan B from
December 2013 to June 2016 and the Group's existing Term Loan C
from December 2014 to March 2017. Lenders who choose to extend will
be offered a 20% cash prepayment at par
(ii) Extend the maturity of the Group's Revolving Credit
Facilities to June 2016. SKG's existing Revolving Credit Facilities
comprise RCF1 maturing December 2012 and RCF2 maturing December
2013
(iii) Flexibility to issue additional pari passu ranking senior
secured bonds, as and when market conditions are considered
optimal, to repay SCF debt at par thereby further extending the
Group's average debt maturities and further diversifying its
sources of funding. This will be achieved by removing the existing
EUR1 billion limit on the principal amount of senior secured bonds,
which was fully utilised in the November 2009 bond issue
(iv) Permit the prepayment, as and when deemed appropriate, of
the 2015 Senior Subordinated Notes from the proceeds of new senior
secured bonds, from an additional facility under the SCF or from
cash on balance sheet, subject to leverage being equal to or less
than 3.5 times at the time of prepayment
(v) Permit the use of an additional facility under the SCF to
refinance existing tranches under the facility
Subject to the approval of 66 2/3 per cent or more of its
lenders to the requested amendments,the Group agrees to:
(a) pay each consenting lender a consent fee of 15 basis points
('bps')
(b) in addition to the payment under (a) above, pay each
consenting lender extending its Term Loan B and/or its Term Loan C
commitment an extension fee of 35bps, based on the amount of such
lender's commitment after the 20% cash prepayment payable to
extending lenders has been applied
(c) pay Term Loan B and C extending lenders a margin increase of
50bps at leverage levels above 2.5 times and 37.5bps at leverage
levels at or below 2.5 times
(d) in addition to the payment under (a) above, pay each
consenting lender extending its RCF1 and/or RCF2 commitment an
extension fee of 50bps
(e) pay extending RCF1 and RCF2 lenders a margin increase on
drawn amounts of 75bps and 50bps respectively at leverage levels
above 2.5 times and 62.5bps and 37.5bps respectively at leverage
levels at or below 2.5 times, together with a commitment fee on
undrawn amounts of 40% of the drawn margin
Margin increases and commitment fees will take effect
immediately upon the requested amendments becoming effective.
A copy of SKG's letter requesting the consent of its lenders to
the proposed amendments to its Senior Credit Facility Agreement is
available on the SKG website at www.smurfitkappa.com/investors.
Deutsche Bank, London, is Facility Agent.
About Smurfit Kappa Group
Smurfit Kappa Group is a world leader in paper-based packaging
with operations in Europe and Latin America. Smurfit Kappa Group
operates in 21 countries in Europe and is the European leader in
containerboard, solidboard, corrugated and solidboard packaging and
has a key position in several other packaging and paper segments.
Smurfit Kappa Group also has a growing base in Eastern Europe and
operates in 9 countries in Latin America where it is the only
pan-regional operator.
Contacts
Bertrand Paulet FTI Consulting
Smurfit Kappa Group
Tel: +353 1 202 71 80 Tel: +353 1 663 36 80
E-mail: ir@smurfitkappa.com E-mail: smurfitkappa@fticonsulting.com
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