Last Tuesday, CML Group launched a $25m six year floating rate note issue through FIIG Securities. The senior secured notes will initially pay a floating rate of 540bps over 30 day bank bill rate and are available to wholesale investors only
Key points
- CML Group launched a $25m six year floating rate wholesale bond issue through FIIG Securities.
- The deal is senior secured and shares many features with a securitisation of receivables including various ‘credit enhancements’ and covenants underpinned by cash flow from a book of receivables.
- The interest rate will be 30 day BBSW plus an initial margin of 5.40bps which at current market rates, will deliver a first coupon of 7.30%.
- CML is an ASX listed (code: CGR) provider of finance, payroll and recruitment services with a market capitalisation of circa $19m and further $10m of listed convertible notes (code: CGRG).
Deal summary
Source: FIIG Securities, CML Group
Issuer summary
- CML Group Ltd (CML) is an ASX listed (code: CGR) provider of finance, payroll and recruitment services with 45 FTE staff across three offices (two in Sydney and one in Brisbane).The group has a market capitalisation of circa $19m as at 1 May 2015 and has also recently issued an additional $10m in ASX listed convertible notes
- The invoice finance division is positioned for growth with the note issue to fund organic growth and an acquisition (Cashflow Finance Australia) in this sector
- The structure of the notes shares many features with a securitisation of receivables including various ‘credit enhancements’ and covenants underpinned by cash flow from a book of receivables
- CML Noteholders will be in a senior secured position and as such recovery in the event of a default would be expected to be high
- The portfolio of receivables is covered by an insurance policy with an AA- rated insurer covering losses greater than $5,000. This insurance policy provides significant protection to noteholders
- The receivables book is also protected by dynamic cash reserving (and other structural features) which increases as performance deteriorates. Arrears performance has significantly improved over the past 15 months through investment in staff and improved systems
- The receivables are short term (47 days average) and if required, the portfolio can be placed in runoff leading to a rapid repayment of debt.
- As part of FIIG’s pre-issue review process, PwC has assessed the CML’s policy and procedures and will also provide quarterly reviews to provide additional oversight
Further information
For more information please refer to FIIG's full Research Report and the Information Memorandum (accessible by wholesale investors only, login required).