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Ontex makes mountain debt less risky

With the issuance of 580 million euros, the diaper manufacturer shifts the focus of debt repayment from 2022 to 2026.


New debt securities of €580 million will be issued through a private placement with major investors. This diaper product was announced on Monday at statement.

The bonds have a maturity date until 2026. The interest rate will be determined on demand. The importance of refinancing this debt is great. The new CEO, Esther Pursby, can use the new money to pay off old debts and thus shift the focus on debt repayment from 2022 to 2026. This gives it more time to boost the group’s cash flow.

Balta came this spring with Similar refinancing. The carpet group is also struggling with a combination of a high mountain of debt and a hard-hit cash flow, thus giving itself more breathing room.

Last week there were still some analysts disappointment That Berrozpe did not simultaneously announce debt refinancing on Investor Day. Moody’s Rating Agency Named This refinancing was already considered necessary at the beginning of this year to protect Ontex’s liquidity.

848 million

mountain of debt

At the end of 2020, Ontex took on debt of €848 million, 3.6 times its operating profit before depreciation (EBITDA) for that year.

The bulk of the debt is currently a $600 million term loan due in 2022. This loan is for him Annual Report 2020 An interest rate one and a half percentage points higher than the three-month Euribor rate.

Moody’s maintains an Ontex credit score of “B1” in an update. This is four steps down the “investment grade” category.

The rating agency believes that Ontex’s promised deleveraging will come primarily from the sale of business units, as profits will be under pressure in the coming years due to a combination of expensive raw materials, weak exchange rates and costs associated with austerity programmes. We seem to expect free cash flow to be around negative 30 million in both 2021 and 2022.