(Sharecast News) - Shaftesbury Capital has entered into a £300m unsecured loan agreement, it announced on Tuesday, with an initial maturity period of three years.
The FTSE 250 company said the agreement provided the option to extend the loan tenor by up to two additional periods of one year each, subject to lender approval.
It said the primary purpose of the facility, in conjunction with its existing cash reserves, was to settle the remaining balance of an unsecured loan that was initially arranged during the merger and subsequently drawn in April.
That loan, which totalled £376m, was originally secured to facilitate the repayment of the Shaftesbury secured bonds and is scheduled to mature in 2024.
As indicated in a recent trading update on 27 November, the firm's cash balances as of 30 September, adjusted for recent asset sales, stood at £200m. Additionally, the Covent Garden revolving credit facility, with a value of £300m, remained untapped.
The firm said the facility encompassed both term loan and revolving credit components, offering Shaftesbury Capital the flexibility to effectively manage its drawn debt levels, liquidity, and finance costs.
Notably, the agreement incorporated a £125m uncommitted accordion feature, potentially enabling the company to augment the total revolving facility commitments.
The refinancing initiative would result in an extension of the weighted average maturity of the company's drawn debt to over five years.
Shaftesbury Capital said its current weighted average cost of debt remained unchanged at 4.2%.
When considering interest income from cash deposits and the advantages of interest rate hedging, the effective cash cost was reduced to 3.3%.
The lending consortium responsible for the facility comprised Santander UK, HSBC UK and BNP Paribas London.
"We are pleased to have completed the early refinancing of the £576m loan through this facility and other initiatives this year, which highlight the attractiveness of our exceptional portfolio and further enhance our capital structure," said chief financial officer Situl Jobanputra.
At 1007 GMT, shares in Shaftesbury Capital were up 0.11% at 122.44p.
Reporting by Josh White for Sharecast.com.
