Big Yellow Turns To Lloyds, HSBC And M&G Investments For Refinancing

LONDON (Alliance News) - Big Yellow Group PLC Tuesday said it has completed the refinancing of its bank facilities, resulting in both a lower average cost of debt and an increased average unexpired term of its debt facilities.

In a statement, the self storage group said it has signed a five-year GBP145.0 million loan facility with Lloyds Bank PLC and HSBC Bank PLC, expiring in August 2019. Half of the bank facility is term, while the other half is revolving. The term loan has a margin of 175 basis points over the London interbank offered rate, and the revolving loan has a margin of 150bp, a reduction of 75bp on the previous facility. On completion, the GBP145.0 million five-year bank facility has GBP72.0 million drawn.

In addition, the group has signed a new GBP70.0 million facility with M&G Investments Ltd, part of Prudential PLC. The term will be seven years from the date of drawdown which can occur at any time up to June 29, 2015. The loan will be secured against a portfolio of 15 freehold self storage centres. Half of the seven-year loan is fixed through a forward start interest rate derivative. The balance of the loan is variable, based off three-month LIBOR plus margin. The average cost of the M&G loan at the current rate of LIBOR will be 3.75%, Big Yellow said.

Lloyds Bank PLC also has provided Big Yellow with a GBP70.0 million short-term bridging facility, which must be repaid on the drawdown of the M&G loan.

With the group's banks facility requiring 50% of all borrowings fixed, Big Yellow said it has cancelled GBP40.0 of its existing interest rate derivatives at a cost of GBP1.4 million in cash.

"We are delighted to have refinanced our core bank facility and further diversified our lending pool through the new loan from M&G. These committed facilities, coupled with our existing GBP95.7 million loan from Aviva (remaining term 13 years), have significantly increased the average unexpired term of our debt facilities to 7.8 years. In total we now have GBP238.0 million drawn out of our total committed facilities," Chief Financial Officer John Trotman said in a statement.

"As a result of this refinancing, and prior to the drawing of the M&G facility, our average cost of debt decreases from 4.6% to 3.7%. Following the M&G facility being drawn and the Lloyds bridging loan being repaid, we would expect the average cost to be approximately 4.2%, based on the current levels of LIBOR," Trotman added.

Big Yellow shares were Tuesday quoted up 0.1% at 536.00 pence.

By Samuel Agini; samagini@alliancenews.com; @samuelagini

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