SAINTS prearranges replacement long-term debt

RNS Number : 8091V

Scottish American Investment Co PLC

10 April 2019

 

The Scottish American Investment Company P.L.C.

prearranges funding for replacement of its long-term debt at maturity

Legal Entity Identifier: 549300NF03XVC5IFB447

The Scottish American Investment Company Trust P.L.C. ('SAINTS') announces that it has agreed terms to issue £80m of long-term private placement debt to refinance its long-term borrowings when its existing debenture matures in 2022. The replacement debt will be secured, unlisted and denominated in sterling.

The purpose of this transaction is to remove any refinancing risk and to obtain long-dated financing at what the Company believes to be attractive pricing levels, with the intention of enhancing shareholder returns and income over the long term. There will be no change to the overall level of indebtedness of the Company as a result of these borrowings.

The agreed terms provide for the issue of £80 million of private placement notes ('the Notes'), with a funding date of 11 April 2022, through the issuance of two series: a 23 year note for £40 million with a fixed coupon of 3.12% to be repaid in 2045, and a 27 year note for £40 million with a fixed coupon of 3.12% to be repaid in 2049. All coupons will be payable semi-annually.  

Centrus Financial Advisors Ltd acted as sole placement agent for the transaction.

The Pensions Insurance Corporation Plc has agreed to purchase the Notes.

Peter Moon, Chairman of SAINTS, says:

"Our current borrowing arrangements date from a time when the prevailing interest rates were much higher than today, and the existing debenture bears a coupon of 8%. The existing debenture cannot be repaid early without significant penalty. However, I am pleased to say that we have been able to take advantage of current market conditions to agree replacement long-term borrowing at a fixed rate of just over 3% per annum. 

In arranging this refinancing, the Board has considered the continued benefit to the Company of having long term debt and the likely returns and income which will be produced for shareholders by associated investments over time, as well as the cost of this borrowing.''

With any investment, capital is at risk.  The value of shares can fall as well as rise and investors may not get back the amount invested. The trust's risk could be increased by its investment in unlisted investments.  These assets may be more difficult to buy or sell, so changes in their prices may be greater.  Due to the trust's investments in overseas securities, changes in the rates of exchange may also cause the value of investments to go down or up. SAINTS also invests in emerging markets and is only suitable for those investors prepared to accept a higher level of risk. The trust can borrow money to make further investments (sometimes known as 'gearing' or 'leverage'). The risk is that when this money is repaid by the trust, the value of the investments may not be enough to cover the borrowing and interest costs, and the trust will make a loss. If the trust's investments fall in value, any invested borrowings will increase the amount of this loss.

Baillie Gifford & Co Limited

Company Secretaries

10 April 2019

Regulated Information Classification: Additional regulated information required to be

disclosed under the laws of a Member State

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