Towergate Partnership has postponed its £665m bond offering as a result of conditions in the debt markets, according to a statement
The company had announced its intention to offer £665m of 2017 and 2018-dated senior secured notes and senior notes.
It met with a large number of institutional investors in Europe and the US and received strongly positive feedback on the quality of its business model and leading market positions.
However, Towergate Partnership said in a statement last week that conditions in the public debt markets have deteriorated materially in response to global events outside of the company’s control, leading to an increase in the current cost of the financing.
It read: “As a result, the company has decided to postpone the offering of the notes for the time being. The company will continue to monitor market conditions and will provide further additional updates as appropriate.
“Towergate’s financial performance continues to be strong and earnings before interest, tax, depreciation and amortisation for the first quarter of 2010 was ahead of budget. Following the renegotiation of the Group’s debt facilities in 2009, Towergate benefits from long-term financing facilities and has no immediate need to refinance.”
Andy Homer, group chief executive of Towergate Partnership, said: “We intended to take advantage of the favourable bond market conditions to refinance the Group’s existing debt facilities and to provide additional funding for future acquisitions.
“Bond market conditions have worsened significantly since we launched the offer and, for the moment, it is not cost effective to pursue the offering. We will consider returning to the markets again when conditions improve.”
Towergate Partnership’s accounts for 2009 show group total debt (minus capitalised loan costs) at £646.6m and company debt at £557.6m at the end of last year, compared with £546m in 2008. The amount owed to creditors after more than one year was £631.8m for the group and £524.7m for the company in 2009. Amounts owed to credits within one year was £457.4m for the Group and £228m for the company.
James Dow, partner for corporate finance specialists Dow Schofield Watts, said: “Towergate is in a fairly satisfactory situation. The amount of debt is not really ideal.
“It decided to get cheap money and take advantage of what they thought was a buoyant market but appear to have been told it was a waste of time so have shelved it because of the sovereign debt market.
“The signal it sends is effectively the bond market is not open at the moment .While new issues for equities and bonds were looking good at the start of they year, which was probably when they started looking at it, this coincided with the election and first sprinklings of a sovereign crisis.
“They do not appear to have a great deal of options other than possibly some equity raising exercise or a flotation.”