With 20 years under her belt at the company, Pilar Gil has been PRISA's CFO since May of last year. Most recently, she’s been instrumental in issuing the group's convertible bonds, which start trading today.
How would you evaluate the operation, overall?
“Very positive. It’s been a huge success, and we’re all very satisfied. The fact that the issue was oversubscribed is a clear sign of shareholder support. Especially in a complicated macroeconomic environment, with a fairly significant rise in interest rates that makes the financial situation very difficult in the short term. We can now reduce leverage and focus on executing the roadmap in line with our 2022-2025 strategic plan.
What, ultimately, were the terms of the operation?
“The operation consisted of the issue of convertible bonds worth 130 million euros, with shareholders having preferential subscription rights. The bonds’ annual coupon rate is 1%, payable in cash. Conversion is mandatory after five years, although there are voluntary conversion windows for investors, which have been set for the months of May and November of each year.”
You’ve highlighted the support of shareholders...
“Shareholder support for the operation has been massively important. They support the group, its management and its future. What’s more, we’ve got lots of shareholders with in-depth knowledge of the sector, and their support is unconditional. They’re committed to seeing our strategic plan through.”
How will the funds be used?
“We’re going to deploy the funds to reduce the variable-interest-rate financial debt. The debt was refinanced in April 2022 and what we’re now going to do is use the funds to partially cancel in advance the junior debt tranche, which is the tranche that has the highest interest costs, at Euribor plus 8%. So, we’re canceling this debt, thereby replacing a financial expense of around 11% with one of just 1%. And to be clear, this isn’t just improvisation. It is part of a route that the group had laid out and is being followed step by step. When the refinancing deal was signed, we envisaged operations aimed at canceling junior debt without penalty. Amortization dates were set for 2026 and 2027, which gave us a term, flexibility and optionality.”
Will the junior tranche of the debt be fully paid off?
“No. As of today, the junior tranche totals 190 million euros. With the 130 million issue, we will first settle the expenses associated with said transaction and we may well keep some back. But yes, the bulk, between 115 and 120 million euros, will be deployed to pay off that tranche. So, there will be some outstanding, but we will continue to make every effort to find measures that will enable us, as soon as possible, to cancel it. The rest of the debt remains unchanged.
How much in savings are we talking about?
“The savings are quite significant. All together, we are talking about 12 million euros per year, and more than 50 million up to maturity in 2027.”
So, what is the financial situation of the group?
“This operation is yet another step forward in our strategy of continued focus on debt control and reduction. Since the refinancing, we have continued mitigating the rise in interest rates, with coverage and hedges for a significant part of the debt to limit impact and, with this latest operation, what we are doing is further reducing the debt. This is a priority, and we’re not going to stop here. We’re going to continue taking measures to reduce debt. And this comes at a very positive time for the company with the businesses showing great results. We have very valuable assets that are very well managed, which means that the results are very positive and are showing enormous potential. We have the necessary liquidity and solvency to meet our obligations in the short and medium term, and we have a very ambitious strategic plan that we are determined to pursue unflinchingly.”
Are there going to be more measures aimed at reducing debt?
“I think that the fact that business is doing well will allow us to continue to organically deleverage. We will continue to study new measures that might allow us to make our current structure more efficient, and we will continue to monitor interest rates to see if we can do more. We will also analyze any option that might enable us to continue deleveraging and maintain the profitability of our businesses so that these can continue to grow, all while pursuing our plan.”
So, what eventual debt are we talking about?
“The company's current net debt will be reduced by around 130 million euros.”
What will be the benefits of this operation for the company?
“There are several benefits. Firstly, the savings that this entails in terms of financial expenses, which will, in turn, enable us to stabilize our cash flows. Secondly, the reduction of debt and the strengthening of our balance sheet, giving us greater margin to meet our financial obligations. And, thirdly, the unconditional support of our shareholders, which allows us to look to the future with greater enthusiasm.
The 2022 results will be published in the coming days. Are you in a position to make a comment on business performance?
“We’ve been issuing updates every quarter. At the beginning of 2022, we published Guidance for the year and in the most recent presentation of results, corresponding to the accounts for the third quarter, we met Guidance despite the difficulties of the environment. We cannot make any announcement now for regulatory reasons, but said Guidance remains operative. We offered some ranges on revenue, Ebitda and cash flow that are in force. We continue along those lines and we are hopeful that we shall be able to comply.
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