The English Court has closed the refinancing of its financial debt amounting to 2,000 million euros, which will allow it to pay less interest, in the longer term and avoiding some guarantees. The new loan consists of two tranches, one of 900 million in long-term loans and another of 1,100 million in a line of credit to deal with ordinary operations. In addition, the 24 banks that participate in the agreement allow the department store group to segregate real estate assets to a new subsidiary worth 2,500 million without the need to repay debt.
The English Court had at the end of the first semester (end of September) of fiscal year 2019, a net financial debt of 3,114 million euros, almost 538 less than a year earlier. In the last two years, debt reduction has been an obsession of the company, to achieve the degree of investment of the rating agencies, which would allow it to finance itself cheaper, and to get a refinancing of the liability, which today announced . In addition, the company said in a statement, the agreement reached with the banks has been made “with investmet grade format”, that is, as if it already had the highest credit rating, although it does not have it.
The refinancing agreement, signed with 24 banks after the board of directors on Wednesday, amounts to 2,000 million and replaces the 2050 million syndicated loan signed at the beginning of 2018. “The agreement decreases the current bank financing of 50 million euros the company, a reduction that has been possible thanks to the Group’s cash generation, “says El Corte Inglés. The pact means that the English Court will have more term, until February 2025 (plus two years, one plus one, optional), and less conditions to return those 2,000 million.
As reported by the group, 900 million correspond to long-term loans and another 1,100 to a line of credit to “meet the needs of working capital”, that is, the cash needs to operate. It allows, says El Corte Inglés, “to ensure stable financing, with lower cost, longer terms and no guarantees.” Company sources have not wanted to confirm the average interest that will be paid for the new financing. “The refinancing agreement also includes sustainability commitments in line with the corporate social responsibility strategies carried out by the Group,” says the company.
One of the highlights of the agreement is that it already includes “the development of the Real Estate business”, that is, the subsidiary that launched El Corte Inglés for the management of its real estate assets. The group has been getting rid of buildings (shopping centers and other real estate) for months and other non-strategic assets (such as the IT subsidiary or the 2000 Optical chain, sold in 2019) to reduce debt. Under the agreement signed with the bank, the group may transfer to that real estate subsidiary 2,500 million in real estate assets “without obligation to repay debt in El Corte Inglés”, that is, without using the income obtained from its sale to reduce passive The department store chain estimated its real estate assets at more than 17,000 million at the end of 2018.
The company has also informed that the board of directors has approved a repurchase plan of around 3% of the shares held by its managers, which may participate “in a new investment system designed to retain executives based on of results “. The new system consists of a fund “with a guaranteed minimum return”, which can be raised based on the company’s results.