Smith & Nephew acts to renew and cut debt facilities ahead of maturity

GLOBAL healthcare group Smith & Nephew has renewed and reduced its debt facilities ahead of their maturity in May 2012.

The group, which has its wound division based in Hull, reduced its $1bn five-year facility to $500m, with effect from December 20. This attracts an unchanged interest rate of 20 basis points above the London Interbank Offered Rate (LIBOR).

The maker of replacement knees and hips also cancelled its $1.5bn multi-currency revolving facility and replaced it with a new five-year $1bn multi-currency revolving facility, which is subject to an interest rate of 70bps over LIBOR.

The group's share price has this week been lifted by takeover speculation in recent days, adding about eight per cent over the past week.

Shares in Smith & Nephew were lifted by reports of a 7.1bn, or 8-a-share cash offer from a US consortium of private equity players. Smith & Nephew declined to comment on the market talk.

Analysts were mixed on the speculation. "I wouldn't necessarily put any more weight behind this one than previous rumours that have been coming out for the last 'x' number of years," said Chris Donnellan at Evolution Securities.

S&N last month said third-quarter sales increased to $941m (582m) in the three months to the start of October, while trading profits hit $215m (133m). But Roger Teasdale, Advanced Wound Management (AWM) president, warned increasing pressure from cash-strapped European governments is likely to dampen margin growth in coming months.