Brait PLC Announces Bond Extensions, Debt Reduction, and Strong Portfolio Performance

  • Brait PLC announces a recapitalization plan involving bond extensions, debt repayment, and equity raise.
  • The plan aims to optimize returns, reduce debt, and strengthen the balance sheet.
  • Premier, Virgin Active, and New Look show positive performance despite market challenges.

Brait P.L.C., a public limited company registered in Mauritius, has unveiled a recapitalization plan. This plan aims to extend the maturities of its convertible and exchangeable bonds, partially repay debts, and raise new equity.

Recapitalization Plan Details

The board has approved a recapitalization plan following extensive stakeholder engagement. The key components of the plan are:

  • Extending bond maturities by three years to December 2027.
  • Partial repayment of the convertible bonds to ZAR150 million.
  • Partial repayment of the exchangeable bonds by ZAR750 million.
  • Raising ZAR1.5 billion through a fully underwritten equity capital raise.
  • Extending the Brait Mauritius Limited revolving credit facility to March 2028, increasing the limit to ZAR1 billion.

Support from Key Stakeholders

Brait has received significant support for the recapitalization:

  • 80% of convertible bondholders by nominal value.
  • 73% of exchangeable bondholders by nominal value.
  • 43% of ordinary shareholders.

Rationale for Recapitalization

Brait aims to monetize its assets and optimize returns for shareholders. COVID-19 impacted the timeline to realize value from Virgin Active and New Look. The bond maturities in December 2024 necessitate a recapitalization to avoid forced asset sales in unfavorable market conditions.

Impact of the Recapitalization

The plan will extend the exit window for assets, reduce debt, and strengthen the balance sheet. Post-recapitalization, net debt is expected to decrease from ZAR6.1 billion to ZAR3.7 billion.

Terms of the Recapitalization

Exchangeable Bonds Amendment

Brait has secured support from 73% of exchangeable bondholders. The amendments include:

  • Extending maturity to December 2027.
  • Reducing nominal value by ZAR750 million.
  • Lowering exchange price to ZAR3.2775.
  • Increasing coupon rate to 6.0%.

Convertible Bonds Amendment

Support from 80% of convertible bondholders has been secured. The amendments include:

  • Extending maturity to December 2027.
  • Reducing nominal value by ZAR150 million.
  • Increasing coupon rate to 8.0%.

Rights Offer

Brait will conduct a fully underwritten rights offer to raise ZAR1.5 billion. The offer is priced at a 25% discount to the theoretical ex-rights price of a Brait share. The proceeds will be used for working capital, portfolio investments, and debt repayment.

Refinancing of BML RCF

Rand Merchant Bank and Standard Bank have agreed to extend the maturity of the BML revolving credit facility to March 2028 and increase the limit to ZAR1 billion.

Timetable and Conditions

The rights offer is expected to be completed by August 2024. It is conditional on shareholder approval, regulatory approvals, and the successful amendment of the bonds.

Portfolio Company Performance

Premier

Premier will announce its financial results on June 11, 2024. Despite adverse trading conditions, Premier has shown strong performance. The MillBake business has maintained margins, and the Groceries and International business showed positive momentum.

Table 1: Premier Financial Highlights

IndicatorFY2024 Estimates
Revenue GrowthLow single digits
Capital Expenditure> ZAR600 million
Leverage Ratio1.4x

Premier has focused on de-gearing and is on track to pay a maiden dividend.

Virgin Active

Virgin Active has continued its strong performance. Membership growth and higher yields have driven positive results across all territories. The total active membership increased from 972,000 in September 2023 to 1,018,000 in March 2024.

Table 2: Virgin Active Membership Growth

RegionSep 2023Mar 2024
South Africa606,000627,000
Italy175,000189,000
UK132,000140,000
Asia Pacific+3%

New Look

New Look’s management has focused on business optimization despite the competitive UK retail market. Higher average selling prices offset slightly lower volumes, leading to stable EBITDA compared to last year.

Conclusion

Brait’s recapitalization plan is designed to provide financial flexibility and support portfolio growth. The plan aims to optimize returns and navigate the challenging market conditions, ensuring a stable future for its stakeholders.


Notice: ob_end_flush(): Failed to send buffer of zlib output compression (0) in /home/dubeshephard/public_html/wp-includes/functions.php on line 5427