INSULATION AND building materials specialist Kingspan has raised €140 million through the sale of bonds to a group of US financial institutions.
The Cavan-based group said yesterday it had completed the private placement of $200 million (€140.6 million) of loan notes with US institutions. The debt is repayable over 10 years and the average interest rate is 5.25 per cent.
The group has hedged some of the interest liabilities by taking on a mix of fixed and floating rates, and has converted some of the money into sterling.
Kingspan originally intended to raise $125 million, but its offer was three times oversubscribed. The high investor demand prompted it to opt for the higher figure.
The company said it would use the money to repay bank debt and for general corporate purposes.
Kingspan is in the market for acquisitions, although its management has stressed it will only do a deal at a price that it believes offers the group value.
Earlier this year, Belgian rival, Recitel turned down an offer of €240 million from the Irish group.
Following its annual meeting in May, chief executive Gene Murtagh said that move gave an idea of the scale of opportunity for which it is looking. However, he said that it would more likely to be 2012 before it made another purchase.
Last year, Kingspan agreed to buy the European insulation businesses of fellow Irish group, CRH, for €120 million. The two completed that deal earlier this year after getting regulatory approval.
Yesterday, Kingspan’s chief financial officer Geoff Doherty said the placement would improve its capital structure by lengthening the period over which Kingspan had to repay its debts.
“It affords Kingspan significant financing headroom as we seek to develop our business globally.”
The loan notes are unsecured and rank equally to Kingspan’s existing senior debt.
The group has been working on reducing net debt over the past three years. At the end of last year, earnings were 12 times interest payments. This was well within its banking covenants, which allow for a ratio of four times interest payments.
Davy analyst Flor O’Donoghue calculated yesterday the average weighted interest of the latest placement would be 4.15 per cent, more than one percentage point below a previous £200 million placement by the group.
Kingspan already has €150 million in loan notes with US institutions, €119 million of which is due for repayment in 2015 and the balance in 2017.
