Wednesday 22 May 2019

Grafton taps US investors in €160m private placement

Grafton CEO Gavin Slark. Photo: Patrick Bolger
Grafton CEO Gavin Slark. Photo: Patrick Bolger
John Mulligan

John Mulligan

Grafton Group is raising €160m in the US via a private placement to refinance existing debt.

The company, which owns the Woodie's DIY chain, said the notes being issued will diversify its sources of funding and extend the maturity profile of debt.

The unsecured notes being issued by Grafton have 10- and 12-year maturities, at an average coupon, or interest rate of 2.5pc.

"The issue of these notes will diversify the group's sources of funding by re-entering the US private placement market, extend the maturity profile of debt and provide greater certainty over the cost of debt for an extended period at attractive rates," said Grafton, whose CEO is Gavin Slark.

It's the first time since 2005 that Grafton has availed of financing via a private placement in the United States.

In June that year, it raised $325m with a placement of seven and 10-year senior notes with a group of US investors.

That placement was also the first time that Grafton had tapped the US market for finance.

Grafton, which generates the bulk of its revenue and profits from its builders merchants outlets in the UK and Ireland, had net debt of just £62.9m at the end of 2017, down from £96.3m at the end of 2016.

The translation of euro denominated debt at the 2017 year-end sterling-euro exchange rate, increased the group's net debt by £9.5m.

Nevertheless, the figure for the end of 2017 is the lowest net debt at Grafton for about 20 years. Its net debt to ebitda (earnings before interest, tax, depreciation and amortisation) ratio at the end of 2017 was just 0.31 times - an extremely low metric.

The group's gross debt is drawn in euro and provides a hedge against exchange rate risk on euro assets invested in the group's businesses in Ireland, the Netherlands and Belgium, according to Grafton.

Grafton's revenue rose 8.6pc to £1.45bn (€1.63bn) in the first six months of this year. On a constant currency basis, it was 7.9pc higher. Like-for-like group revenue rose 3.8pc.

It operates businesses such as Chadwicks, Heiton Buckley, Selco and Plumbase.

Irish Independent

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