(Alliance News) - S4 Capital PLC on Monday said it has agreed debt refinancing to fund future expansion, as revenue and profit continue to exceeded its expectations.
The London-based digital advertising agency founded by Executive Chair Martin Sorrell said that demand has continued at "unprecedented levels" through May and June as its "post-pandemic rebound" continues.
"The pattern of first-half profitability and margins remains very similar to the first halves of 2019 and 2020, weighted to the second half," the company said.
In June, S4 Capital already bumped up expected first quarter net revenue growth to 35%, compared with previous expectations of 30%.
The move followed a similar uplift in forecasts in May, where the figure was raised from 25% to 30%.
With positive results continuing, S4 Capital said it planned to continue its expansion and acquisition strategy after making 11 takeovers in the 12 months to early June.
"The company is in the early stages of planning to expand its activities into a third practice area around technology services and to continue to broaden and deepen its content and data and digital media practices in the Americas and Asia-Pacific," S4 Capital said.
The GBP200 million secured through its new debt financing with a consortium of banks will be used to fund the cash element of any future takeover bids and for general corporate expenses.
HSBC Holdings PLC, Barclays Bank PLC and the London branch of Credit Suisse Group AG will act as lead arrangers for a seven-year EUR375 million senior secured term loan, the company said, replacing its existing EUR25 million and USD28.9 million term loans.
Meanwhile, a five-year GBP100 million equivalent multi-currency senior secured revolving credit facility with Credit Suisse, HSBC, Barclays, JP Morgan Chase & Co and BNP Paribas SA will replace S4 Capital's former EUR35 million and EUR43.5 million facilities.
With its refinancing complete, S4 Capital will maintain its policy of not exceeding maximum net leverage of 1.5 to 2 times earnings before interest, tax, depreciation and amortisation, it said.
S4 shares were down 2.0% at 644.10 pence each in London on Monday morning.
By Scarlett Butler; scarlettbutler@alliancenews.com
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Barclays (BARC)
HSBC Holdings (HSBA)
S4 Cap. (SFOR)
