TIDMBBB
RNS Number : 9055W
Bigblu Broadband PLC
16 December 2019
Bigblu Broadband plc
("BBB" or the "Company" or the "Group")
Refinancing of Existing Debt Facilities
Significant Reduction in Cost of Debt and Net Interest
Payments
Increased Value for Shareholders by Enhancing Free Cash Flow and
Increasing EPS
Bigblu Broadband plc (AIM: BBB.L), a leading provider of
alternative fast broadband services, has agreed a new GBP30m
revolving credit facility with Santander Bank UK plc. This will be
used to replace the two tranches of loan notes totalling GBP12m
issued in 2016 by Business Growth Fund ("BGF") (the "Loan Notes")
and the Group's GBP10m revolving credit facility with HSBC plc (the
"HSBC Facility") and to provide additional working capital to
support the Group.
The Company also announces that HSBC will continue to provide a
GBP4m revolving credit facility and operational banking support to
the Group's UK fixed wireless subsidiary QCL Holdings Limited
("QCL").
This provides the Group with combined facilities of GBP34m with
Santander and HSBC.
The facility with Santander is a 3-year loan agreement with an
option to extend for up to a further 2 years. Interest terms are on
a ratchet to LIBOR according to the Group's net leverage ratio.
This replaces, in its entirety, the BGF Loan Notes which bore
interest at a fixed coupon, and the HSBC Facility which had an
interest charge at a margin related to LIBOR. As a result, there
will be a significant reduction in the Group's annual cost of debt
and net interest payments. Further details on the BGF Loan Notes
and HSBC Facility are included at the end of the announcement.
BGF continues to own 4.5m shares in BBB. As part of BGF's
initial subscription for the Loan Notes in 2016, BGF had options
over 4.9m ordinary shares at an exercise price of 112.5p, expiring
August 2021, and a GBP2.4m convertible Loan Note convertible at an
exercise price of 135p per share. As part of the refinancing, BBB
has agreed to extend the 4.9m options to May 2024 and granted BGF
an additional 1.8m options at an exercise price of 135p expiring
May 2024 to replace the conversion rights within the GBP2.4m
convertible Loan Note which is being redeemed in full. This is
beneficial to the Company as the redemption premium would otherwise
have been payable immediately on early redemption.
BGF has also agreed to defer the repayment of the GBP5.5m
redemption premium on the Loan Notes from May 2021 to May 2024 to
align with the options above.
Impact of Refinance
The Board is pleased to announce a number of key benefits as a
result of the agreement with Santander, which effectively enables
it to re-finance debt with a coupon of 10% with a more flexible
revolving credit facility with a margin of only 3-4%.
As such, the refinancing of existing debt facilities will
support the Group for the next stage of its growth strategy and
will:
-- reduce the Group's cost of debt;
-- provide additional funding headroom to support accelerated growth;
-- provide a simplified capital and covenant structure;
-- defer amortising principal repayments under the BGF Loan
Notes and HSBC Facility which will enhance cash flow; and
-- improve our free cash flow and increase our EPS via reduced
finance charges, which the Directors believe will increase value
for shareholders.
Andrew Walwyn, CEO of BBB plc, said: "I am delighted an
institution such as Santander has recognised the progress BBB has
made and the strong position the Company is in. Being able to
secure such attractive funding to supplement our increasingly cash
generative business immediately following a successful FY19
financial year positions us well to continue our ambitious growth
plans in FY20 and shows how robust the business model we are
building has already become.
"We are delighted that the increasing maturity of our organic
growth model has enabled us to attract such good terms, which puts
us on an even stronger footing to execute our strategy while
increasing value for shareholders. We wish to thank BGF and HSBC
for their ongoing support of the Group and look forward to
continuing our strong relationship going forward."
Sean Longsdale, Managing Director, Structured Finance Group,
Santander Corporate & Commercial, said: "BBB plc has an
excellent track record and is well-placed to benefit from continued
improvements in satellite and fixed wireless technology. We are
delighted that Santander was chosen as a banking partner and to be
supporting such a high growth international business, to realise
their continued ambitions."
Bigblu Broadband plc www.bbb-plc.com
Andrew Walwyn, Chief Executive Via Walbrook PR
Officer
Frank Waters, Chief Financial Officer
Simon Clifton, Chief Technology
Officer
Dominic Del Mar, Corporate Development
Numis Securities (Nomad and broker) Tel: +44 (0)20 7260 1000
Oliver Hardy (Corporate Advisory)
James Black (Corporate Broking)
Walbrook (Media and Investor Relations) Tel: +44 (0)20 7933 8780
Nick Rome/Tom Cooper or bigblubroadband@walbrookpr.com
Previous debt facilities
BGF
BBB entered into funding agreement with BGF in July 2016
pursuant to which BGF provided a total investment of GBP12.0
million by way of a subscription for unsecured loan notes,
comprising GBP9.6 million ordinary notes and GBP2.4 million
convertible notes (convertible at 135p per ordinary share).
The ordinary notes and convertible notes carry a fixed coupon of
10% per annum, with interest payable quarterly in arrears, and are
repayable from May 2021 with bi-annual principal repayments which
end on maturity at 31 May 2024.
A redemption premium of GBP5.5m is also payable on 31 May
2021.
BBB also agreed to grant BGF an option to subscribe for
4,934,661 new ordinary shares exercisable at 112.5p per share at
any time, with proceeds of GBP5.5m to offset the redemption premium
payable. The option lapses on whichever is the earlier of 31 August
2021, redemption of the loan note, or completion of a change of
control.
BBB has the ability to repay both sets of Loan Notes early with
the prior consent of BGF, but subject to an early redemption
payment equivalent to 12 months' interest.
BBB has given various covenants to BGF regarding the conduct of
its business, typical of those required by lenders to growth
companies.
Upon completion of the refinancing, the BGF Loan Notes are to be
repaid in full.
HSBC - BBB facility
In March 2017, BBB secured a GBP5.0m HSBC revolving credit
facility. This was subsequently extended to GBP8.25m in April 2018
and again to GBP10.0m in August 2019, in order to support continued
growth.
As at November 2019 the total utilisation on the facility was
GBP8.25m, which has been drawn for both acquisitions and working
capital.
Upon refinancing this facility is to be repaid in full, and
security over Group subsidiaries will be discharged.
New facility - Santander RCF
A new GBP30m revolving credit facility (RCF) for an initial
3-year term, extendable by 1 year on up to two occasions (at the
option of BBB).
There are no annual clean down payments required.
Interest margin on LIBOR ratchets according to prior quarter's
net leverage ratio (Net Debt / LTM EBITDA), and the cost of debt is
therefore expected to reduce as net debt decreases over the term of
the loan.
The facility includes customary covenants, including:
-- Net Leverage (Net Debt / 12m EBITDA)
-- Interest cover
-- Capex control linked to budgets
The Security on the facility will entail cross-guarantees from
material Group companies, although QCL and its subsidiaries are
carved out and not regarded as a Borrower or part of the Group for
the loan purposes.
Santander will also acquire first ranking security (share
pledge) over BBB's shares in QCL.
Refinancing highlights
BGF have granted consent to the refinancing of the GBP12m in
principal Loan Notes on the following terms:
-- Deferral of the GBP5.5m redemption premium previously due at
the earlier of redemption of the notes or May-21, but now deferred
until May-24.
-- Preservation and extension of the existing share options over
4.9m shares at 112.5p from current expiry date of Aug-21 to May-24,
therefore keeping them aligned to the redemption premium with the
expectation of a cashless settlement of the redemption premium in
shares.
-- Issuance of new options as replacement for the convertible
loan note of GBP2.4m to be redeemed, on the same terms as the
original loan conversion of 1.8m shares at 135p.
The initial refinancing drawdown of c. GBP22.9m includes
repayment of the BGF and HSBC principal, the BGF early redemption
charge, fees and working capital.
When compared against the previous BGF Loan Notes and HSBC
Facility, over the five-year period to 2024 the refinancing is
expected to result in estimated total net cash benefit of c. GBP14m
to the Group arising from:
o c. GBP2.0m cash savings due to the lower interest margin;
and
o GBP12m arising from deferral of the scheduled BGF principle
repayments to May-24.
The current P&L interest charge includes BGF interest rate
of 10% on the GBP12m Loan Notes, the effective interest charge for
the of the GBP5.5m redemption premium over the life of the
instrument (July 2016 to May 2024) and the HSBC facility finance
charges. The Santander RCF reflects a lower and simpler variable
interest margin over LIBOR (which depends on the Group's net
leverage ratio). This is expected to result in finance savings of
c. GBP2.0m over the five-year period to FY24.
Group headroom immediately post-refinancing equals c. GBP13.1m,
being c. GBP7.1m unused Santander RCF and c. GBP6m cash. This
reflects an immediate headroom increase of GBP5.35m against the
current headroom of GBP1.75m on the HSBC Facility.
Quickline is carved out and will maintain its existing GBP4m RCF
facility with HSBC, which has a separate and distinct security
package.
About Bigblu Broadband plc
Bigblu Broadband plc (AIM: BBB), is a leading provider of
alternative super-fast satellite and xed wireless broadband
solutions for consumers and businesses unserved or underserved by
bre broadband throughout Europe and Australia.
BBB has a signi cant target market with 27m customers in Europe
with speeds of under 4 Mbps, and a further 1m in Australia who have
been identi ed as only suitable for either satellite or xed
wireless broadband. Acquisitive and organic growth have enabled BBB
to grow rapidly since inception in 2008 during which me BBB has
completed 20 acquisitions across nine di erent countries. It is
well positioned to continue growing as it targets customers that
are trapped in the 'digital divide' with limited or no bre
broadband options.
BBB's range of solutions includes satellite, next generation xed
wireless and 4G/5G, delivering between 30 Mbps and 300 Mbps for
consumers, and up to 1 Gbps for businesses. It provides customers
with ongoing services from hardware installation and billing to
post-sale customer support, whilst o ering various tari s depending
on end user requirements.
Importantly, as core technologies evolve and cheaper capacity is
made available, BBB will continue to o er ever increasing speeds
and higher data throughputs to satisfy market demands including
'video-on-demand'. BBB's alternative broadband o erings present a
customer experience that is similar to that o ered by wired
broadband and the connection can be shared in the normal way with
PCs, tablets and smart-phones via a normal wired or wireless
router. High levels of recurring revenue, increasing economies of
scale and Government support for the alternative broadband market
in many countries provides a solid foundation for BBB as demand for
alternative super-fast broadband services increases around the
world.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
MSCEAFASFENNFAF
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