Grainger plc Regulatory News (GRI)

21 November 2013

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN THE UNITED STATES, CANADA, AUSTRALIA, JAPAN OR IN ANY OTHER JURISDICTION WHERE IT IS UNLAWFUL TO RELEASE, DISTRIBUTE OR PUBLISH THIS ANNOUNCEMENT

Grainger plc ("Grainger" or the "Company")

Corporate Bond Issuance

Grainger, the UK's largest listed residential property owner and manager, today announces that it has priced a £200m 5.0% secured bond due December 2020. The issue is expected to close next week.

The net proceeds will be used to repay c.£106m of bank term loans, to break certain existing interest rate swaps at a cost of c.£37m and to reduce drawings under the Group's revolving banking facility. This will leave the Group well positioned to take advantage of future investment opportunities in the residential market.

The Bond issue will strengthen the Group's balance sheet by diversifying its sources of debt and lengthening its average debt maturity to 5.5 years (from 4.6 years as at 30 September 2013). The Group's weighted average interest rate before costs will reduce to 5.4% (from 5.7% as at 30 September 2013, and compared to 5.3% for the twelve months to that date.)

The associated cancellation of interest rate swaps will have a marginal positive impact on NNNAV of 0.1p, as the swaps were cancelled at a discount to the mark to market valuation.

Following the completion of the bond issue, Group consolidated loan to value ratio will be slightly below 50%. The Company reiterates its intention to keep this ratio between 45% and 50%.

Grainger has received corporate credit ratings from both Fitch and Standard & Poor's of BB stable, and the bond has been rated by both agencies as BB+ stable.

Andrew Cunningham, Chief Executive of Grainger plc, said:

"The successful bond issue, obtaining £200m from the debt capital markets, allows us to reduce our reliance on traditional bank debt and fulfil our intention to diversify our sources of financing. The issue was well subscribed, and the level of demand reflects the strength of investor confidence in Grainger's business. The issue has placed the Company in a very strong financial position, with extended debt maturities, giving us the ability to take advantage of future investment opportunities."

Barclays, HSBC, Lloyds and RBS all acted as bookrunners and joint lead managers and J.P. Morgan Cazenove acted as Co-Manager. Rothschild provided independent advice to the Company.

-ENDS- 

For further information:

Grainger plc Tel: +44 (0)20 7795 4700

Andrew Cunningham, Chief Executive

Mark Greenwood, Finance Director

Kurt Mueller, Director of Corporate Affairs

FTI Consulting Tel: +44 (0)20 7831 3113

Stephanie Highett/ Dido Laurimore/ Will Henderson/ Nick Taylor

Disclaimer

The press release shall not constitute an offer to sell or the solicitation of an offer to buy securities. There will not be any sale of these securities in any such state or country in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any state or country.

This press release may not be distributed, directly or indirectly in or into the United States or to any U.S. person (as defined in Regulation S under the U.S. Securities Act of 1933, as amended (the "Securities Act")). This press release is not an offer of securities for sale or the solicitation of any offer to buy securities in the United States or in any jurisdiction in which such offer or sale would be unlawful. The securities referred to herein have not been and will not be registered under the Securities Act, and may not be offered or sold in the United States absent registration or exemption from registration under the Securities Act.

This press release may include projections and other "forward-looking" statements within the meaning of applicable securities laws. Any such projections or statements reflect the current views of Grainger PLC about further events and financial performance. No assurances can be given that such events or performance will occur as projected and actual results may differ materially from these projections.

Within the United Kingdom, this announcement is directed only at persons having professional experience in matters relating to investments who fall within the definition of "investment professionals" in Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 ("relevant persons"). The investment or investment activity to which this announcement relates is only available to and will only be engaged in with relevant persons and person who receive this announcement who are not relevant persons should not rely or act upon it.