In addition, the Board believes that it must address the misleading rumour and speculation surrounding the reasons for the Bond and the negative sentiment expressed towards the Company, and the consequent fall in price of the Company's ordinary shares since the start of the week.
Firstly, the Company continues to have a close and positive relationship with its lending banks, HSBC and Barclays, and continues to operate with significant headroom with respect to its covenants under the existing 2-year facilities put in place in August 2018. Our lending banks are acting as joint global coordinators and bookrunners on the potential Bond issue and have been working with us on the project since April of this year.
As the Group has grown over the last six years, our lending banks have been, and continue to be, very supportive of our strategy and performance. Nevertheless, as our funding requirements have grown over time, various options have been examined to simplify the capital structure and provide long-term financing for the Group, and in early 2018 it was decided that a Bond issue would be a suitable fit for the Company for the following reasons:
1. The long-term (5 year) nature of the Bond;
2. A fixed rate of interest for the term of the Bond, which was felt to be prudent given the current outlook for interest rates;
3. The terms of the Bond, which are customary for an issuance of this nature, provide flexibility for the Company to implement its strategy;
4. The depth of the bond market, which will assist the Company in achieving its objectives.
Work has been progressing on the bond for several months although, due to relevant securities law requirements, the Company was unable to provide an update to the market of its intentions until the announcement on Monday. The supplementary financial information also released on Monday following the Bond announcement was to provide the equity market with previously undisclosed financial information, which is being provided to potential investors as part of the Bond offering.
The use of proceeds of the potential Bond issue will be solely to refinance the existing 2-year facilities and to pay related fees and expenses. It is important to note that the proposed Bond issue does not increase the net indebtedness of the Company.
The potential Bond issue is an entirely discretionary exercise, and a final decision will be made at the Company's discretion in the coming days on whether to move ahead or retain the existing facilities.
A further announcement will be made in due course.
The person responsible for arranging the release of this announcement on behalf of the Company isMichael Scott, Group Finance Director.