CVS announces £50m buyback, refinancing and Australian acquisition

(Sharecast News) - Veterinary services provider CVS Group said on Tuesday that it has successfully refinanced its bank debt facilities, as it announced the launch of a £50m share buyback and the acquisition of a small animal practice in Australia.

The company said it has refinanced its £350m debt facilities on improved terms. This includes a term loan of £125m and a revolving credit facility of £225m, both repayable in May 2030, and the existing overdraft facility of £5m, renewable annually.

The margin payable on drawn debt has reduced by 20 basis points, CVS said. These new facilities are provided by a syndicate of eight banks, including Westpac Banking Corporation, the first Australian bank to join the group's financing syndicate. The group has an option to extend these facilities for a further year.

CVS said it has agreed to buy a further single site first opinion companion animal practice in Sydney for an initial consideration of AUD$8.2m (around £4m). It has also signed contracts for a further practice acquisition in Australia - for AUD3.2m (£1.7m) - with completion expected in the coming weeks.

Finally, CVS said that in light of the successful refinancing and consistent with its capital allocation priorities, the board has approved a share buyback programme to return up to £50m to shareholders.

Chief executive Richard Fairman said: "We are pleased to have refinanced our bank facilities through to May 2030 on improved terms. This provides additional flexibility and firepower to launch a meaningful share buyback programme, alongside disciplined capital allocation in enhancing our estate and quality of service to our customers and investing in our attractive pipeline of accretive acquisitions.

"We look forward to updating investors at the time of our full year trading update on how this approach underpins the delivery of shareholder returns."

At 0932 BST, the shares were up 4.8% at 1,257p.

Berenberg said: "With a cash-generative model targeting 70% cash conversion and improved financing offering additional firepower, we continue to see attraction in the group's life-for-like and inorganic growth prospects, while today's news of a share buyback should also be taken well.

"At just 12.5x FY27 price-to-earnings, we continue to think there is a significant opportunity for investors in the shares and we reiterate our buy recommendation."

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CVS Group