Merlin Plans To Issue Bonds Amounting To €1,000M

10 November 2015 – Expansión

The Socimi wants to debut on the debt market, by registering a bond program that will range between €800 million and €1,000 million and will be placed in 2 to 4 issuances.

This formula will help the company to pay off the €1,600 million debt it took out to acquire Testa and which it expects to refinance in 2016.

In an interview, Merlin’s President, Ismael Clemente (pictured above), explained that the company – which debuted on the stock exchange in June last year – is already working towards the refinancing of Testa’s debt and that it expects to see results during the course of the next year.

Merlin reached an agreement with JP Morgan and Santander (which account for 90% of this liability) to extend the maturity period by 2 years.

The refinancing will take place in two tranches – one syndicated loan and another similar to a bridge loan, payable with future bond issues, the next step in the company’s strategy.

In this sense, Clemente explains that the company intends to register a bond program for an amount ranging between €800 million and €1,000 million to be placed in 2 to 4 issuances.

To this end, the company is in talks with the three large ratings agencies in order to obtain investment grade ratings, which it hopes to receive during the first half of 2016.

The Socimi, which in its day starred in the largest IPO since Bankia, also hopes to become part of the Ibex 35, given that following its purchase of Testa from Sacyr, it will be ranked between 25th and 27th in the list, with a market capitalisation of almost €3,600 million.

Once it has completed the purchase of Testa – an operation that was announced in June for €1,793 million – Merlin will operate under its own brand and will no longer maintain the Testa brand. It will also increase the size of its Board of Directors (to between 12 and 15 members) by incorporating Testa’s independent directors, and will do the same with its staff and management team, which it will transfer to its headquarters on the Paseo de la Castellana. (…).

The company has revealed that its results for the first nine months and for the year as a whole are in line with its forecasts and it has indicated that at the strategic level in 2016, Merlin plans to merge the Socimi’s and Testa’s teams, as well as to integrate the systems. (…).

Original story: Expansión

Translation: Carmel Drake