Loxam taking advantage of good market conditions to secure financing

Loxam today announced that it has launched an offering of €1,150 m aggregate principal amount of senior secured notes due 2025 and 2026 and €250 m aggregate principal amount of senior subordinated notes due 2027. The proceeds from the offering of each series of Notes will be deposited into escrow accounts pending satisfaction of the conditions precedent set forth in the combination agreement related to the previously announced acquisition by the Company of 100% the outstanding securities of Ramirent plc . PF of the refinancing, total priority debt would stand at €2,825m (from €1,635m) and would translate into a 3.7x net leverage at this level (from 3.1x pre-transaction ). (incurrence covenant of 3.85x on the 2023 notes, and 4.00x on other notes). PF total net leverage would stand at 4.9x PF of the acquisition (from 4.3x). As a reminder, despite a downgrade trigger set at 4.5x on the leverage of the group, S&P did not downgrade the group’s LTCR. The rating agency revised the outlook to negative though. Our view is that this refinancing is more or less neutral for existing bondholders. The group also provided updated information regarding the Group’s recent financial performance and the synergies it anticipates achieving in the event that its previously announced tender offer for all issued and outstanding shares in Ramirent is successful. (please see our Credit News here : Loxam makes an equity offer for Ramirent : What to know? ). Revenue grew by approximately 5% from April 1 st , 2019 to May 31, 2019 driven by good revenue growth in France (approx. +10%) due to 1/ higher volumes and 2/ a favorable number of trading days. The International division grew by approx. +3%, primarily as a result of the acquisition of U.K. platforms. As regards to synergies coming from the acquisition of Ramirent , the group expects to generate approx. €24m of cumulative gross synergies (3.1% of Ramirent + Stavdal revenues) over the first 3 years (end 2022) incl. €4m in 2020. Run-rate annual synergies should be approx. €12m per year starting in 2022. This is roughly in line with what we were expecting (€26m) given the limited geographic overlap between Loxam and Ramirent (as a reminder, for the Hune + Lavendon acquisition, synergies represented 3.6% of total turnover).