Retailer Ahold Delhaize has announced the buy back and cancellation of around ¥33 billion worth of floating rate notes, due May 2031, dubbed the ‘JPY Notes’.
An associated Yen-Euro currency swap will be unwound as part of the transaction. Together, the JPY Notes and the swap effectively represent a synthetic €299 million long-term liability at an annual interest rate of 7.065%.
The company said that it has agreed to buy back the JPY Notes at a purchase price of 108.1% for settlement on November 15, 2016. Cancellation of the JPY Notes shall take place on the same day.
It added that the ‘transaction is value accretive, achieves a reduction in annual interest expense of approximately €21 million and will have no material impact on current leverage ratios, Ahold Delhaize's ability to fund its growth opportunities or to further optimize its capital structure’.
Commenting, analysts Bernstein Research said, 'The deal will have no material impact on Ahold Delhaize's leverage ratios, although net debt will approximately increase by the €243 million loss in FY16 and be offset by the impact of the interest cost savings in future years. We don't expect the transaction to impact Ahold Delhaize's ability to fund growth opportunities or its ability to further optimize capital structure.'
© 2016 European Supermarket Magazine – your source for the latest retail news. Article by Stephen Wynne-Jones. To subscribe to ESM: The European Supermarket Magazine, click here.
