CVS says refinancing provides extra "firepower" as launches buyback

(Alliance News) - CVS Group PLC on Tuesday launched a new GBP50 million share buyback programme alongside two small acquisitions and a refinancing of its bank facilities.

Shares in the Norfolk, England-based provider of veterinary services rose 4.3% to 1,250.23 pence each in London on Tuesday.

The FTSE 250-listing said its GBP350 million bank debt facilities, which were repayable on February 21, 2028, have been refinanced on improved terms.

The new facilities comprise a GBP125 million term loan repayable on May 20, 2030, a revolving credit facility of GBP225 million repayable on the same date, and the existing GBP5 million overdraft facility, renewable annually.

CVS said the margin payable on drawn debt has reduced by 20 basis points. It has an option to extend these facilities for a further year.

The company said its capital allocation policy remains unchanged and focused on acquisitions to accelerate sustainable growth; investment to maximise organic growth; maintaining a healthy balance sheet; and ordinary returns to shareholders.

The firm said it is committed to a "progressive" dividend policy and expects to recommend a final dividend in respect of the financial year to June 30.

Any capital deemed surplus to the four priorities may be returned to shareholders.

Reflecting this, CVS launched a GBP50 million share buyback. The firm said the impact on its shares from macroeconomic and UK political uncertainty has been seen in the company's current rating making a buyback of the shares "attractive".

The buyback, which is expected to be completed by November 24, will be conducted by Peel Hunt LLP and Joh Berenberg, Gossler & Co KG.

Earlier this month, Montreal-based Converium Capital Inc, which owns around 2% of CVS, called on the firm to address its share price discount with an immediate buyback programme.

The investor said CVS should repurchase shares worth GBP100 million, representing 12.5% of the company's current market capitalisation.

Chief Executive Officer Richard Fairman said the refinancing provides "additional flexibility and firepower" to launch the "meaningful" share buyback programme.

In March, CEO Fairman announced he intends to retire, and on Tuesday CVS said it is making progress identifying a successor.

Further, CVS said Laura Hagan, independent non-executive director, will be appointed as Senior Independent Director with effect from July 1.

CVS also announced the acquisition of a further single site first opinion companion animal practice in Sydney, Australia. The initial consideration is AUD8.2 million, or around GBP4.4 million.

The AUD3.2 million acquisition of a further practice in Australia is expected to be completed in the coming weeks.

CVS said it has an attractive pipeline of accretive, bolt-on acquisition opportunities currently focused on Australia, where it plans to deploy GBP50 million.

CVS will release a full year trading update on July 23.

By Jeremy Cutler, Alliance News reporter

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