Thursday 22 March 2018

Coillte looks to refinance its debt pile

Coillte chief executive Fergal Leamy
Coillte chief executive Fergal Leamy
Colm Kelpie

Colm Kelpie

The State's forestry agency is looking to refinance its debt pile and is in talks with all of its commercial lenders under plans to slash costs.

Coillte is holding discussions with its banks and has also tapped the European Investment Bank (EIB) for a near €100m loan that it believes could save up to €5m per year over the next five years.

It is the first time that the semi-state company has applied to the Luxembourg-based lender, which provides loans at favourable terms.

Coillte is looking to refinance about €200m, which includes its debt and ongoing facilities.

The commercial semi-state company has already implemented a strategy to cut costs, which has seen the number of staff at its headquarters fall by 60.

The vast bulk of Coillte's sales are to the UK, which also puts pressure on the company to reduce costs in order to cope with what could be a sustained drop in Sterling.

The forestry agency is in discussions with the EIB to secure the €98m loan facility, amid plans to spend about €35m per year on plantation and roads.

"This is part of Coillte's overall transformation strategy, one part of which is to reduce costs in the business," a Coillte spokesman said.

More than 35,500 ha of forest are expected to be planted, along with 373km of new forest roads, while an additional 1,288km of forest roads are to be upgraded.

The company generated profits last year of €47.6m, two thirds more than the previous year. The company paid a €5m dividend to the State.

Coillte said earnings before interest, taxes, depreciation and amortization (EBITDA) stood at €89.6m at the end of last year.

The UK is Coillte's biggest market - accounting for 80pc of its €300m annual sales, chief executive Fergal Leamy has said.

Ahead of June's Brexit referendum, Mr Leamy said the company had hedged against a potentially sharp decline in the value of Sterling.

But in the longer term, trade restrictions would hurt Irish exports, he said. It is not clear if it has hedged against the decline currently experienced.

Coillte has also mapped its entire 445,000 hectares of land and marked it according to its potential use, including suitability for not only forestry but wind and solar generation. The vast majority of the portfolio is earmarked for forestry, but as much as 20,000 hectares is regarded as suitable for non-core projects, that can range from tourism to power generation.

Irish Independent

Business Newsletter

Read the leading stories from the world of Business.

Also in Business