Monday 02 July 2018 by William Arnold Company updates

Axsesstoday ASX listed notes

Axsesstoday is raising a minimum of AUD50m in unsecured floating rate notes paying up to 5.20%pa over the bank bill swap rate. We look at the relative value compared to its existing secured notes

michaelphelps

Axsesstoday Group (Axsesstoday) has announced its intention to raise a minimum of AUD50m in unsecured notes. The notes will be floating rate and pay an indicative interest rate of 4.90-5.20%pa over BBSW, with a five year  maturity date on 20 July 2023.

The 2023 notes will be listed on the Australian Stock Exchange (ASX) under the Simple Corporate Bond regulations and therefore have no call dates.

The proposed notes are issued at the holding company level and rank behind all other debt issued by the group including its senior secured bank facilities, the secured 7.50% June 2021 notes and the BBSW+6.50% October 2021 notes. See Figure 2 below for the capital structure of the company’s debt obligations.

Compared to the 7.50% and BBSW+6.50% 2021 notes, which are now available to retail investors, the unsecured 2023 notes have less restrictions and weaker covenants. The issue of the unsecured notes does not affect our recommendations on the secured 2021 notes.

To read the full research note on the proposed issue please refer here for retail clients, and here for wholesale.

Relative value compared to the secured notes

We believe the proposed 2023 notes do not offer attractive value, particularly noting the unsecured position in a company carrying significant secured debt, the weaker covenants, and the five year bullet maturity. We believe the two existing notes offer better relative value compared to the proposed notes, given the security position and shorter tenor. The table below summarises the key features of the proposed notes.

Figure 1: Key terms

Source: Axsess company reports
Figure 1


Figure 2: Capital structure

Source: Axsess company reports
Figure 2

About Axsesstoday

Axsesstoday provides commercial equipment finance to small businesses via a distribution channel of retailers and referrers. The company was founded in 2012 and listed on the ASX in December 2016.

The group operates in two key markets:

  • The hospitality industry, with equipment funding for coffee machines, display units, cooking equipment, refrigeration and dishwashing machines
  • Other operational critical equipment funding including transport assets and to a lesser extent industrial and fitness equipment

The group offers a broad range of proprietary finance offerings with a term of 12 months to 60 months. The average term of the contract pool is 47 months and the core hospitality product offered is an operating lease with a term of 48 months and an option to purchase outright at each anniversary.

The company’s key differentiating factor is that it offers a white label solution to its retail partners. Axsess supports the retailers by providing graphic design and bespoke marketing collateral with the retailer’s chosen branding.


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