Thursday, October 03 10:31:13
Dublin-based global packaging and paper group, Smurfit Kappa, this morning said it is refinancing E500m worth of senior notes due 2017.
The redemption of the senior dent will come from around E220 million from the Group's existing cash resources plus existing credit facilities, it told the markets this morning.
It said it expects cash interest savings from the redemption will be around E30 million a year and the transaction will be immediately earnings accretive with an annualised increase in EPS of approximately 11 cent.
There will be a one-off exceptional cost of approximately E26 million arising from the redemption premium and the accelerated amortisation of unamortised deferred debt issue costs related to the notes being redeemed.
Ian Curley, Smurfit Kappa Group CFO, said the transaction is a further significant step in reducing our funding costs following the transition of SKG's debt portfolio to an unsecured corporate profile.
"The redemption further lowers SKG's overall cost of capital, materially reduces debt servicing costs and enhances earnings and free cash flow," he said.
"The strength of our free cash flow generation allows us to fund a significant portion of the redemption from existing cash resources. Following the transaction, the Group continues to maintain strong liquidity in the form of cash and undrawn committed credit facilities," Mr Curley added.
Last month, Mr Curley said he anticipates revenues from non-Western European markets to represent a combined 40pc of group annual sales by 2015.
Currently, SKG's operations outside of Western Europe make up 23pc of overall revenue; 19pc in the Americas and 4pc from Eastern Europe. Western Europe remains dominant, with a 77pc contribution rate. However, by the time of the group's 2015 full- year earnings presentation; Western Europe is likely to represent 60pc of overall group revenue, with other markets contributing 40pc of sales; the Americas making up 30pc of that.
Management also reiterated its intention to sustain a progressive dividend policy - previously alluded to at its AGM in May.