LONDON (Alliance News) - Scottish American Investment Co PLC on Wednesday said it has agreed terms for the refinancing of its long-term loans when they mature in 2022.
Owned by Baillie Gifford & Co Ltd, Scottish American primarily invests in global equities, although it also invests in bonds and property.
Under the terms of its prearrangement, Scottish American will issue GBP80 million of long-term private placement debt in order to refinance its long-term borrowings. The replacement debt is to be secured and unlisted.
The notes will have a funding date of April 11, 2022, and will be issued in two series: a GBP40 million note with a fixed coupon of 3.12% due 2045, and a GBP40 million note with a fixed coupon of 3.12% due 2049. All coupons are to be payable semi-annually.
The goal of the deal is to eliminate refinancing risk and to "obtain long-dated financing" at an attractive price. The company's "overall level of indebtedness" will remain the same after the refinancing.
Centrus Financial Advisors Ltd acted as placement agent for the deal and Pensions Insurance Corp PLC agreed to purchase the notes.
Scottish American Chair Peter Moon said: "Our current borrowing arrangements date from a time when the prevailing interest rates were much higher than today, and the existing debenture bears a coupon of 8%. The existing debenture cannot be repaid early without significant penalty. However, I am pleased to say that we have been able to take advantage of current market conditions to agree replacement long-term borrowing at a fixed rate of just over 3% per annum."
Moon added: "In arranging this refinancing, the board has considered the continued benefit to the company of having long term debt and the likely returns and income which will be produced for shareholders by associated investments over time, as well as the cost of this borrowing.''
Shares in Scottish American were flat at 387.00 pence on Wednesday.