Centrus advises Greene King on £750m bank facility, Spirit debenture refinancing and swap breaks

Transaction Overview

Greene King is one of the UK’s leading pub retailers and brewers, with over 3,000 pubs countrywide and two breweries in Bury St Edmunds and Dunbar.

On 27 November, Greene King PLC amended its existing £400 million revolving credit facility to incorporate a new £350 million revolving 3 year facility taking the total facilities to £750 million. The new facility is available to fund the acquisition of pubs from the Spirit debenture which improves the ability of the company to refinance Spirit debenture bonds and related swaps.

Centrus Solution

Centrus acted as corporate finance and structuring advisor to Greene King on the bank facility, Spirit bond repayment and breaking of associated interest rate swaps.

The new bank facility will be partially drawn down to fund the purchase of 104 pubs from the Spirit debenture, the financing vehicle for Spirit Pub Company which was acquired by Greene King in 2015. Spirit will then apply the disposal proceeds and existing cash balances to the prepayment of A1, A6 and A7 bonds and related financial obligations, which will eliminate a cash sweep and 1.5% margin step-up that were due to commence from September 2018.

Related to this transaction the company will also make a one-off payment of £40-50 million to terminate the long-dated interest rate swaps hedging the prepaid Spirit bonds. The cash interest savings of refinancing the prepaid bonds via bank facility is approximately £2.5 million per quarter.

Centrus previously advised Greene King on the consent solicitation process to remove the Ambac wrapper from Spirit debenture in August 2017.

“The Centrus team supported us throughout the process, from initial strategy development through to execution of the bondholder consent solicitation, bank facilities and debenture bond refinancings. They became a seamless part of our delivery team, consistently providing expert independent advice and strong execution support.”

Eileen Tindall, Head of Treasury & Tax – Greene King PLC

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