Pendragon, the UK's largest franchised dealer group, expects to complete a refinancing of its debt next week.
It has announced on the London Stock Exchange that the refinancing consists of a £175m 6.875% seven-year bond issue and a new £145m four-year revolving credit facility provided by four banks until June 30 2017.
The margin on the new bank facility will initially be 3.5%, but will reduce as the ratio of net debt to underlying EBITDA (after stocking interest) falls, and will be 2.5% when that ratio is under 1.5x.
The group will repay and cancel its legacy high-coupon debt private placements, the cross-currency swaps associated with them, and its existing bank facility, all of which were due to mature in June 2014.
The costs associated with that repayment and cancellation, and other transaction costs, are estimated at £12.9 million.This refinancing exercise extends considerably the Group's debt maturity.
Trevor Finn, chief executive, said: "We are delighted to announce the refinancing of the group which brings stability and simplicity to our financial structure. We will be repaying our costly and restrictive legacy debt, and considerably extend the maturity of our debt arrangements.
"I am pleased to welcome our new bondholders as stakeholders. The group remains on track to achieve its net debt: underlying EBITDA target of 1.5x by the end of next year."