WOOD Flash - GTC: launches a landmark bond refinancing with a 6.5% EUR 455m 2030 tranche

Yesterday, GTC announced that it has started to refinance the EUR 500m June 2026 bond tranche, of which there is EUR 494m outstanding. It is aiming to issue an EUR 455m 5Y (October 2030) secured bond with a 6.5% coupon. The new tranche will be issued initially by an entity separate from GTC Group. The liabilities would be later assumed by GTC, secured by pledges on its assets. The new tranche is anchored by Schroders, which may buy EUR 275-300m of the new notes. If successful, the refinancing would mark a crucial milestone for the company, and a key achievement for the new management, under the leadership of Ms. Czaplicka. GTC’s options have been looking increasingly slim, as it spent money on acquisitions and dividends in recent years, instead of saving for the refinancing of the bond tranche. If successful, the 6.5% coupon would be materially cheaper than we would have expected in the eventual refinancing deal. The refinancing would decrease the likelihood of a catastrophic outcome for the company significantly, in our view. The tranche should buy GTC time and could improve its position materially for prospective asset sales negotiations, potentially allowing it to reach a better price. In wake of the announced refinancing, Fitch announced that it is maintaining its current ‘B’ rating.