Refinance deal extends SIG credit to £350m

The Sheffield​-based company said the refinancing ​has increased its revolving credit facility by £100m to £350m​.

Analysts said SIG has managed to extend its debt profile at no extra cost​.

Analyst Adrian Kearsey​ ​at Panmure Gordon said: “These private placement notes have been replaced by £83m of notes, with a​ ​10 year maturity,​ ​and an extension of the​ ​revolving credit facility​ ​to​ ​350m​ ​from £250m.

“The effective interest rate is unchanged, therefore SIG has extended the duration of its debt profile at no extra cost.​“

As a result ​of the refinancing, ​the ​g​roup’s total debt facilities have increased by £53m to £531m at current exchange rates, with unchanged covenants.

​SIG said​ the facilities ensure that it has enhanced funding headroom and liquidity to support its medium term strategic plans.

Last month SIG said it ​is making progress and it ​is confident it can achieve its targets following an increase in sales in the first four months of 2016.

But the group warned that construction markets in mainland Europe remain uncertain and competitive pressures continue.​

​The group’s revenue rose 9 per cent in the first four months of 2016​, boosted by acquisitions which contributed 5 per cent to growth and currency fluctuations which contributed 3 per cent.

Group like-for-like sales rose 1.1 per cent.

​The performance was better in the UK and Ireland with a 2.8 per cent increase in like-for-like sales.

The group’s insulation and interiors business reported a 3.1 per cent increase in like-for-like sales following better customer focus and a resilient new build residential market in the UK.

The exteriors business saw a 1.0 per cent fall in like-for-like sales, an improvement over recent quarters, suggesting there are signs that the UK repairs, maintenance and improvement market is stabilising.

​Revenues in mainland Europe rose 9.6 per cent, but like-for-like sales fell 1.0 per cent, hit by a 3.1 per cent decline in France as the French construction market recovery faltered

But SIG’s chief executive Stuart Mitchell said leading housing indicators remain positive, with new residential starts up 3.1 per cent on a rolling 12 months basis to March 2016.

​Like-for-like sale​s in the German business were down 1.0 per cent although the group delivered positive like-for-like sales growth in Ireland, Benelux and Poland.

​T​he ​g​roup has spent £14.6m on five in​-​fill acquisitions so far this year.

​“​While the ​g​roup has made a reasonable start to the year, with the key summer and autumn trading periods yet to come, construction markets in ​m​ainland Europe remain uncertain and competitive pressures persist​,” said Mr Mitchell.​

​“​However, SIG continues to make progress on its initiatives to improve business performance and has a high degree of confidence in achieving its 2016 targets of a net incremental benefit of £3m in supply chain and at least £10m in procurement.​“

​He added that the group expect​s​ to make progress in 2016 in line with its previous expectations.

SIG​ has warned that the threat of a Brexit - Britain voting to leave the European Union - is a cause for uncertainty which could damage confidence.

The firm, which has adopted a neutral stance on the issue, said it doubted a vote either way would have an impact on the company itself, but expressed concern about the ramifications.

Mr Mitchell said: “The Brexit potential is a cause for uncertainty and uncertainty is not good for any business. We are concerned about uncertainty in terms of confidence.”

SIG said it is fairly immune to the outcome as although 50 per cent of its sales come from the Continent it doesn’t import or export.

“Our French businesses buys products in France and our German business buys products in Germany so we have very little activity that crosses borders,” said Mr Mitchell.