Pfleiderer AG secures long-term financing

Jan 11, 2010. /Lesprom Network/. Pfleiderer AG has agreed with approximately 30 banks on the conditions of long-term and secure corporate financing. The package in a total volume of approximately Euro 800 million will be available until the end of 2013, the company said in a press release received by Lesprom Network. It is divided into syndicated credit of Euro 600 million, a Schuldschein of Euro 155 million and bilateral credit agreements of Euro 60 million. The existing financing structure is thus to be continued with longer maturities and changed conditions. A new feature of the financing is a loan of Euro 140 million from Germany’s KfW banking group, granted at arm’s length conditions from the “Germany Fund” and sourced out of the special program entitled “Large Enterprises.” Pfleiderer AG communicated the possible violation of a financial covenant and entered into talks with the banks at an early stage. There was never any doubt about the financing itself, but about the related costs, which will rise by a small eight-digit amount compared with 2009. For 2010, no credit clause has been agreed upon which refers to the ratio between operating profit (EBITDA) and net debt. For the following years, such a covenant has been specified but with the required leeway. With the help of a strong cash flow from operating activities, Pfleiderer AG plans to reduce its net debt by more than Euro 350 million in the next four years. This will result in lower interest rates, as specified in the credit agreements, which will ultimately improve Pfleiderer’s profitability. Following the successful talks with the banks, one of the options now available again for reducing debt is to raise new equity when the time is right for such a move. With regard to debt reduction, the focus is on business operations. Pfleiderer anticipates a strong free cash flow in the coming years, thanks to significantly reduced investment expenditure, the cost-reducing actions previously announced and structural adjustments. The company is now benefiting from past high volumes of investment for the development of the new plant in Moncure and the MDF plants in Grajewo and Novgorod (as of 2012). In the present situation, this is the right basis for organic growth. Independently of Pfleiderer AG, the majority-owned subsidiary Pfleiderer Grajewo SA, which is listed on the Polish stock exchange, is also holding discussions with its banks concerning a financing volume of approximately Euro 300 million. Agreement has been reached with the five banks involved on the key points of a financing package which will also run until 2013.