DCC taps US market to secure $390m in funds
Published 15/02/2010 | 05:00
Conglomerate's spend on acquisitions
IRISH conglomerate DCC is "very close" to raising $390m (€286m) from the US private placement market, marking one of the largest private placements by an Irish corporate in recent years.
The news comes a fortnight after DCC upped its full-year profit forecasts, citing an "excellent" January as the cold snap drove higher heating demand at its energy division.
The Irish Independent has learned that DCC initially went to the US market looking for $150m on January 27. That offering was over-subscribed, prompting DCC to upsize to $390m.
"It's not finished yet, but it's very close," a DCC spokesman said of the deal this weekend.
DCC's existing debt doesn't begin maturing until 2014 and the spokesman said that while the conglomerate was a "very acquisitive" company, the new money was not being raised to fund the purchase of any particular business.
"DCC just takes advantage of opportunities when it sees them," he said. "They have a war chest (for acquisitions) and they replenish it as they go along."
DCC's most recent trading statement, issued on February 2, showed that since September 30, the conglomerate had committed to spending €112.6m on acquisitions, including a €94m spend by DCC Energy.
DCC has previously tapped the US private placement market, having raised $250m back in 2007. "There's an appetite for DCC in the US," the spokesman said.
DCC's deal comes almost a year after Bord Gais tapped the US private placement market for $450m worth of funding, in an offering that was also over-subscribed.
Fellow semi-state ESB went on to raise $507m in the US private placement market in the summer, while drug development firm Amarin secured $70m from US private placements last October.
The DCC deal is divided into five tranches, with terms ranging from five to 12 years and interest rates, or coupons, ranging from 4.37pc to 5.81pc. The spokesman said DCC planned to "swap" the fixed-rate dollar coupons for floating-rate euro and sterling notes.
By doing that, DCC hoped to minimise currency exposure and end up paying interest of less than 3pc.
Spanning everything from distribution to energy and healthcare, DCC has a market capitalisation of almost €1.6bn and makes 70pc of its profits in Britain.
The company's trading statement reported "strong revenue and operating profit growth" in the last three months of 2010, on a constant currency basis.
That strong growth, fuelled by "favourable weather conditions" that helped DCC energy, prompted the firm to "improve" its outlook for the year ended March 2010 to profit growth of between 5pc and 10pc.