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23 Feb, 2021 11:48

Victoria raising EUR 350m to fund acquisitions

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Flooring company Victoria announced on Tuesday that, following continued strong operating performance and favourable market conditions, it would offer €350m (£301.91m) in senior secured notes due 2026.

The AIM-traded firm said the net proceeds would be used for general corporate purposes, in particular acquisitions, and the partial refinancing of existing 2024 senior secured notes to further improve the maturity profile of its debt.

It said the new bonds would not increase its net debt, with proforma senior net leverage of about 2.8x and pro-forma total net leverage of around3.1x.

Other than amounts used for the partial refinancing, the cash raised would remain on the balance sheet until invested into earnings-accretive acquisitions, which the board said would happen in the short term.

The board also said Victoria's “prudent financial policy” remained unchanged, with the group committed to its policy of around 3x senior net leverage post-completion of acquisitions, falling to 2x when in a “steady state”.

It also noted that, even prior to Koch Equity Development's commitment of £175m of perpetual preferred equity in November, Victoria had £200m of cash and undrawn credit lines as of September.

Thus, it said the additional capital from the proposed bond issue was solely intended to be deployed on “high-quality” near-term acquisitions.

Looking at its current trading, Victoria said it achieved record revenues and operating profits for the third quarter to December, despite the existence of lockdowns and other Covid-19-related challenges in various markets.

Trading for the quarter delivered revenues of about £184 million, an increase of 16% at constant currency year-on-year.

That comprised an 11% increase in the UK and Europe soft flooring division, driven by organic growth; a 26% improvement in UK and Europe ceramic tiles, driven by a combination of organic growth and the acquisition of Ceramiche Ascot in March; and growth of 9% in Australia, driven by organic growth.

“As reported in our interim results, the group's EBITDA margin post initial lockdown increased on a like-for-like basis by more than 300 basis points versus the prior year, driven by investments in manufacturing and distribution and 'bottom slicing' of margin-dilutive products that have produced a sustainable competitive advantage,” the board said in its statement.

“The positive trend in margin continued further in the third quarter.

“As a result, EBITDA for the 12 months ended December was £120m - above that for the last financial year to March, despite the inclusion of the April to June Covid-19 lockdowns.”

At 1130 GMT, shares in Victoria were up 2.8% at 789.5p.


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Pilling and Co Stockbrokers Ltd. is not responsible for the content or accuracy of third party news articles and we may not share the views of the author or publisher.

We provide third party news for your convenience and information only and make no representation or endorsement whatsoever and hereby exclude all liability for any loss or damage that may be incurred by you as a result of your access or use. Please note that third party content may be subject to terms and conditions imposed by the third party owner of that content.