El Corte Inglés closes its refinancing for up to 2,600 million | Companies

The English Court has sealed this Friday the refinancing of its bank debt, for an amount maximum of 2.6 billion euros and with an extension of terms until March 2027, and which can be extended until 2029. The distribution company thus fulfills one of its objectives for this year: to considerably reduce its financial bill and approach the desired degree of investment.

The agreement has been signed with its syndicate of banks, more than twenty, led by Santander, BBVA, BNP Paribas, JP Morgan or Bank of America. All of them have agreed with the company to refinance the previous bank contract of 2,000 million, signed in February 2020, just before the pandemic. It is restructured into a long-term loan of 919 million and a credit line of a maximum of 1,081 million.

As this newspaper published on February 18, another 600 million are added to this amount to pay off one of the two bond issues that the group has on the market. On the one hand, the one launched in September and December 2018 for 690 million; and another for 593 million, carried out in September 2020, in the midst of the pandemic. Both are due in March 2024. Canceling one of them is a key step in reducing the group’s financial bill, as they entail higher costs when compared to the current conditions granted by their financial entities.

Those issued in 2018 pay a 3% coupon; those placed in 2020, during the pandemic, pay 3.62%. The sources consulted by this newspaper suggest that the idea is to amortize this issue and thus bring the cost of the company’s debt below 3%, a level worthy of any large Spanish investment-grade company. Both issues are listed below that threshold: the profitability of the 2018 is at 2.4% and that of 2020, at 2.6%.

According to the company, “the refinancing contract is carried out in the format of a investment gradealthough El Corte Inglés has not yet obtained it, which implies support for the company by national and international banks”. The distribution group reports that the agreement includes sustainability commitments, “in line with the responsibility strategies corporate social that it carries out”.

This operation is the first major financing granted by the bank to a Spanish company since the beginning of the war in Ukraine. The agreement with Mutua and the improvement in the business of the large Spanish distribution firm have overcome doubts in both the bank loan market and the bond market in recent weeks. In Spain, the only company that has managed to place bonds on the market has been Iberdrola, along with Sabadell and Santander on the financial institution side.

The entities that make up the El Corte Inglés banking syndicate are Santander, BBVA, BNP, Caixabank, Unicredit, Sabadell, Crédit Agricole, Kutxabank, Unicaja Bank, Intesa San Paolo, Société Generale, Deutsche Bank, Bank of America Merrill Lynch, Goldman Sachs, JP Morgan, Ibercaja, Barclays, Citibank, Spanish Cooperative Bank, ICBC and Aresbank.

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