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Ei Group plc (EIG)

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Friday 15 March, 2019

Ei Group plc

Disposal, use of proceeds & updated guidance

RNS Number : 9522S
Ei Group plc
15 March 2019
 

                                                                                   

Ei Group plc

 

Completion of sale of Commercial Property Portfolio,
Use of Proceeds and Updated Financial Guidance

 

Completion of sale

Ei Group plc ("Ei Group" or the "Company") is pleased to announce the completion on the 14 March 2019 of the sale of the first tranche of the commercial property portfolio comprising 348 of the 370 commercial properties to be sold. Total expected gross aggregate consideration in respect of the sale of the 370 commercial properties is £348.0 million, of which £336.6 million has now been received. Completion of the sale of the remaining 22 commercial properties, the gross proceeds of which will in aggregate amount to £11.4 million, is subject to superior landlord consent and each sale will complete after the relevant consent is obtained.

 

Use of proceeds

·      Reduction of debt

Total proceeds, net of costs of £3.9 million, from the sale of the first 348 properties is £332.7 million, of which £175.8 million relates to the sale of commercial properties within the Unique securitisation. These proceeds will therefore be used in the full prepayment of the Class A3 Notes, part prepayment of the Class A4 Notes and in meeting associated costs of approximately £14.0 million arising on the early prepayment of the Class A3 and Class A4 Notes. Prepayment will take place on the earliest possible date, which is expected to be 28 June 2019. Formal notice of the prepayment will be given to the noteholders in due course in accordance with the securitisation documentation.

 

The Board intends to use £35 million of the remaining net proceeds to repay and cancel the outstanding balance on the Group's £50 million term loan facility agreement and approximately £115 million to repay amounts drawn under the Group's £150 million revolving credit facility agreement, with the balance of some £7 million to be held as cash.

 

·      Share buyback

Taking into account these disposal proceeds, current trading and the continuing good progress being made against our strategic objectives, the Board has approved the return of up to an additional £35 million to Shareholders via a further share buyback programme, which will commence immediately.

 

 

Transitional services

The Purchaser has appointed a third party to manage those commercial properties which it has acquired, therefore the previously announced proposed Transitional Services Agreement has not been entered into.

 

 

 

 

Updated financial guidance adjusting for the Disposal

Following the successful completion of the first tranche of the Disposal, we are providing updated financial guidance for the current and following financial year:

·      The 370 commercial properties comprising the Portfolio contributed £26 million to Group EBITDA in the financial year to 30 September 2018. We estimate that, prior to their sale, these properties will have contributed £12.2 million to Group EBITDA in the current financial year. Following completion of the Disposal, the Portfolio will make no contribution to Group EBITDA in the financial year to 30 September 2020.

·      As the majority of the proceeds from the Disposal will be used to repay borrowings, we now expect our Group interest costs to be in the range of £136 million to £138 million in the current financial year and £120 million to £124 million in the financial year to 30 September 2020. 

 

Simon Townsend, Chief Executive Officer, commented:

"Today's announcement is a significant milestone for the business and evidence of our ability to unlock value across our estate and realise attractive cash proceeds for shareholders. This disposal will allow us to focus on driving growth across our core Publican Partnerships, Managed Operations and Managed Investments businesses, while also reducing our debt and delivering further shareholder value. With that in mind, we are pleased to announce a further £35 million share buyback programme, in addition to the £20 million programme we completed in January."

 

 

Enquiries:

Ei Group plc, Simon Townsend / Neil Smith 0121 272 5000

Tulchan Communications, Jonathan Sibun / Jessica Reid 020 7353 4200

 

 

Capitalised terms used in this announcement have the meanings given to them in the circular dated 17 January 2019, which is available on the Company's website.

 

 

Forward-looking statements. Certain statements made in this announcement are forward-looking. Such statements are based on current expectations and are subject to a number of risks and uncertainties that could cause actual results to differ materially from any expected future events or results referred to in these forward-looking statements. Unless otherwise required by applicable laws, regulations or accounting standards, we do not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future developments or otherwise. 

 


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