Bigblu Broadband agrees new credit facility with Santander

(Sharecast News) - Alternative fast broadband provider Bigblu Broadband has agreed to a new £30m revolving credit facility with Santander Bank UK, it announced on Monday.
The AIM-traded firm said the facility would be used to replace the two tranches of loan notes totalling £12m issued in 2016 by Business Growth Fund, and its £10m revolving credit facility with HSBC, as well as to provide additional working capital.

It also announced that HSBC would continue to provide a £4m revolving credit facility and operational banking support to the group's UK fixed wireless subsidiary, QCL Holdings, meaning the company had combined facilities of £34m with Santander and HSBC.

The board said the facility with Santander was a three-year loan agreement, with an option to extend for up to a further two years.

Interest terms were on a ratchet to LIBOR, according to the group's net leverage ratio.

It replaced, in its entirety, the BGF loan notes which bore interest at a fixed coupon, and the HSBC facility which had an interest charge at a margin related to LIBOR.

As a result, there would be a "significant reduction" in the group's annual cost of debt and net interest payments.

BGF would continue to own 4.5 million shares in Bigblu, the board noted, explaining that as part of its initial subscription for the loan notes in 2016, BGF had options over 4.9 million ordinary shares at an exercise price of 112.5p, expiring August 2021, and a £2.4m convertible loan note convertible at an exercise price of 135p per share.

As part of the refinancing, Bliblu said it had agreed to extend the 4.9 million options to May 2024, and granted BGF an additional 1.8 million options at an exercise price of 135p, expiring May 2024, to replace the conversion rights within the £2.4m convertible loan note which it said was being redeemed in full.

That, the board said, was beneficial to the company as the redemption premium would otherwise have been payable immediately on early redemption.

BGF had also agreed to defer the repayment of the £5.5m redemption premium on the loan notes from May 2021 to May 2024, to align with the other options.

"I am delighted an institution such as Santander has recognised the progress Bigblu Broadband has made and the strong position the company is in," said chief executive officer Andrew Walwyn.

"Being able to secure such attractive funding to supplement our increasingly cash generative business immediately following a successful 2019 financial year positions us well to continue our ambitious growth plans in the 2020 financial year, and shows how robust the business model we are building has already become.

"We are delighted that the increasing maturity of our organic growth model has enabled us to attract such good terms, which puts us on an even stronger footing to execute our strategy while increasing value for shareholders."

At 1614 GMT, shares in Bigblu Broadband were down 0.51% at 98.5p.