The owners of BWG have secured a €200 million loan facility from AIB to fund the expansion of its chain of Spar and Mace convenience stores over the next three to five years. Ciarán Hancockreports.
AIB is expected to syndicate the loan, bringing a couple of other banks into the transaction. The loan will carry an interest rate of about 5 per cent.
The war chest has been secured by Newhill, a wholly owned subsidiary of Triode, the company that acquired BWG in a €390 million transaction last October.
Newhill handles BWG's property dealings. Triode is owned by chief executive Leo Crawford, director John Clohisy and finance chief John O'Donnell.
"We have to make sure we have the funds to punch our weight and secure new sites," Mr Crawford said. "We'll have the firepower now to spent €40 million a year on new stores."
BWG is planning to open more than 100 new Spar stores over the next three years, under a plan called Destination 10. This will bring the number of Spar outlets to 520. Ten or more stores are being lost annually as a result of traders cashing in on rising property values. "That's a fact of life now," Mr Crawford said.
BWG will acquire either the freehold or leasehold to sites that it will then rent to Spar franchisees. It also plans to expand the Mace chain of stores.
BWG is currently achieving earnings before interest, tax, depreciation and amortisation of €40 million a year. The new owners plan to increase this to €50 million annually over the next three to five years. No dividend payments are planned, with all profits reinvested in the business or used to pay down debt.
BWG owns about 133 Spars around Ireland, which are valued on its balance sheet at €194 million. Mr Crawford said some of these would be sold to franchisees over time.
Triode's acquisition of BWG involved €312 million of debt, secured from AIB. In the six months since the deal closed, the company has paid down €40 million of the debt, according to Mr Crawford.
This was helped by the sale of Egan's cash and carry property in Dublin for €23.5 million.
