Spar-owner BWG completes €220m refinancing

BWG, the owner in Ireland of the Spar and Mace chains, has completed a €220 million refinancing to ease the terms of its remaining legacy boomtime debts and free up cash to fund its €23 million buyout of ADM Londis.

The new facility is provided by Bank of Ireland and AIB, which were prior lenders to the group. They are joined by a new lender to the retail group, Barclays Bank Ireland, which is pursuing growth in the Irish corporate lending market.

The new facility is guaranteed by Spar South Africa (SSA), the Johannesburg-listed group that bought an 80 per cent stake in BWG last year in a deal that wiped more than €70 million from the retail group’s debt levels.

SSA announced the guarantee to the stock market on Monday. It is understood that the involvement of the listed group and its decision to give a parent guarantee means BWG has managed to negotiate significantly better terms on its loans. This is expected to free up further cashflow for it to put into expansion activities.

The refinancing is one of the final steps in the legacy debt restructuring undertaken in recent years by BWG's three minority shareholders, chief executive Leo Crawford, property director John Clohisey and finance director John O'Donnell.

The group, which was bought out for €390 million by the three men during the boom, had heavy property debts until two years ago.

The first restructuring, in November 2013, wiped out an estimated €100 million from the borrowings. It then wiped a further €70 million in another restructuring last August, when SSA came on board.

Option

The South African group took an 80 per cent stake in return for €55 million, as well as buying an option to buy out the three executives’ remaining stake after five years.

It is understood the deal to buy the Londis business is very close to being done, having received clearance from the State’s competition watchdog this month. The franchise supplies about 200 stores which generate sales of €195 million.

It gives BWG access to about 50 per cent of the convenience store market, once it has integrated the Londis business. BWG’s biggest competitor in the convenience sector is Musgrave’s Centra chain.

BWG’s network comprises almost 1,200 stores operating under the Spar, Mace, EuroSpar, and XL brands. The deal has already received shareholder approval from the ADM Londis network. It wasn’t necessary for SSA to call a shareholder vote on the deal.

Results

SSA’s recent interim results revealed that BWG’s latest half-year sales were listed as 7.66 billion South African rand, (€563 million). The results said Spar and Mace grew their market shares but that the larger format

Eurospar

in Ireland had been hit by the squeeze on supermarkets.

“Management interventions are being implemented to address these issues,” SSA said.