Coillte to save €35m over 10 years thanks to new loan from five banks
State forestry agency Coillte has agreed a €220m syndicated loan facility with five banks that it expects will save it about €35m over 10 years, the Irish Independent has learned.
It is also planning on increasing the dividend paid to the State this year and the following year from the €5m it paid last time.
The commercial semi-state agency is also looking for another 40 to 50 voluntary redundancies across its divisions.
Coillte is in the midst of a strategy to cut costs, which has seen the number of staff at its headquarters fall to 20 from 90.
Just before the end of last year Coillte also secured a near €100m loan from the European Investment Bank.
The additional €220m is provided by Ulster Bank, Bank of Ireland, AIB, Danske Bank and Rabobank. It replaces more expensive debt.
The arrangement is for five-to-ten year money, with savings expected to be in the region of €35m over 10 years.
"We're delighted to have got it through within the year," Coillte ceo Fergal Leamy told the Irish Independent.
"We went quite aggressively after it. Timing was good - the combination of having a good relationship with our banks already, but also the EIB coming in was quite helpful in terms of being quite competitive.
"We were keen to take advantage of where the markets are at the moment and to ensure we have a financing facility that is more linked to the type of business we are, with longer term investments. The money that we have at the moment brings an awful lot more stability to the group and gives us a really strong solid foundation for the future."
Mr Leamy, a former private equity specialist, said the loan facilities secured are "very competitive". Coillte has embarked on a so-called transformation strategy to reduce costs and is two years into the four-year programme.
Its aim is to produce cash annually of €60m a year in the next four years, and grow earnings before interest, taxes, depreciation and amortisation to more than €120m over that period also.
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.
Mr Leamy said the cost-cutting programme is not linked with Brexit, which he described as a challenge, as between 70pc and 80pc of the agency's business in the UK, but said it would help improve the position of the company.
He said the wing of the business most exposed to the UK had been hedged to the end of last year and the agency is hedged against dips for another nine months.