Tuesday 07 March 2017 by FIIG Research ripples_on_water Company updates

McPherson’s to exercise call option and redeem $15m of floating rate notes

McPherson’s has advised bondholders it will exercise its call option and redeem $15m of floating rate notes on 31 March 2017 at the 103% call price

The company continues to generate good cashflow and has reduced debt significantly over the year. At 31 December 2016, leverage (Net debt/ LTM EBITDA) reduced to 1.5x from 3.1x at 31 December 2015. Management has stated a 1.0x–1.5x target range.

No action is required from noteholders. Investors will be contacted soon with full information.

The company has previously bought back $20m of its fixed and floating bond lines. This action will bring total redemptions to $35m compared to the original total issue size of $60m.

The table below illustrates the pro forma capital structure after this redemption.

Pro forma capital structure

  Drawn Limit/ issue size Maturity
Secured overdraft 15.0 48.25 Rolling
Bond floating rate BBSW +4.30% 10.0 30.0 31 March 2019
Bond fixed rate 7.10% 15.0 30.0 31 March 2021
Total debt 40.0 108.25
Source: FIIG Securities, company reports