REG - Intnl Workplace Grp Regus PLC - H1 2024 Pre-Close and Financing Update

International WorkplaceAnnouncement

28/06/2024 11:15

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RNS Number : 3451U  International Workplace Group PLC  28 June 2024

28 June 2024

 

International Workplace Group plc, the world's largest hybrid workspace
platform with a network in over 120 countries through flexible workspace
brands such as Regus and Spaces, and the digital services business Worka,
issues a pre-close trading update before the H1 2024 results.

 

IWG ISSUES DEBUT EURO INVESTMENT GRADE BOND, EXTENDS DEBT MATURITY TOTAL DEBT
AND OUTLOOK UNCHANGED

 

International Workplace Group plc ("IWG" or the "Company") is pleased to
announce an update to its financing and capital structure prior to H1 2024
results due to be released on 6 August 2024.

 

IWG has successfully completed a series of debt transactions ("Transactions")
that:

·      Extend debt maturity through

o  €575m 6.5% (€400m has been swapped to $427.7m 8.153% coupon)
Investment Grade Bond (the "Bond") due June 2030. The weighted-average coupon
is 7.65%

o  New $720m revolving credit facility ("RCF") due June 2029

·      Reduce the face value of the £350m 0.5% convertible bond
(swapped to $445.2m) outstanding to £231.7m (swapped to $294.8m) and
facilitates the eventual repayment of the convertible bond due December 2027
(the "Convertible Bond")

·      Maintains the same level of total debt as reported prior to the
transactions

 

The above is supported by an investment grade rating from Fitch of BBB
(Stable).

 

 

Summary of IWG debt facilities

 

 Post refinancing                                                                                     Pre refinancing
 Description                                                            Maturity                      Description                                                            Maturity
 €575m 6.5% bond, of which €400m is swapped into $427.7m at 8.153%      June 2030

 £231.7m (face value) convertible bond, swapped to $294.8m              Final maturity December 2027  £350m (face value) convertible bond, swapped to $445.2m                Final maturity December 2027

 $720m RCF facility                                                     June 2029                     $1,107m RCF facility of which £366m was drawn as at 31 December 2023   November 2025

 

Simultaneous to closing of the Bond, IWG has entered into hedging arrangements
to swap €400m (c.70%) of the issuance and the related interest into $427.7m,
with a weighted-average coupon of 8.153%. The hedge will remain in place for
the life of the bond and has qualified for hedge accounting with amortisation
of associated fees over a 6-year period. The remaining 30% of the issuance
(€175m) and the related interest at a coupon of 6.50% will remain in Euros
as these amounts are anticipated to be covered by a natural currency hedge due
to the anticipated geographic diversity of operations of the Company.
Accordingly, the weighted average interest cost on the new debt is 7.65%.

 

 

The Company intends to use the proceeds of the Bond and its renewed RCF
facilities to repay the Convertible Bond and reduce RCF drawings. As part of
the Transactions and as already announced, IWG has repurchased £118.3m face
value of the convertible bond for cancellation for a consideration of
£109.0m. The same Investors also placed orders in the Bond offering totaling
€75m.

 

After the transactions described above, the Company's total debt remains the
same.

 

A summary of the new debt issuances and debt paydown is outlined below:

 Sources                       Uses
 New €575m 6.5% bond    $615m  Repayment of drawn RCF((1))  $465m
                               Buyback of convertible bond  $150m
 Total sources          $615m  Total Uses                   $615m

Note: FX assumed GBP:USD of 1:1.27; EUR:USD of 1.07.

(1) Illustrative, based on £366m drawn RCF as at 31 December 2023.

 

Both IWG as a Group and the Bond itself has investment-grade rating of BBB
(Stable) assigned by Fitch, which has been confirmed. IWG is committed to
maintaining its investment grade rating and believes that the previously
announced capital allocation policy which targets a pre-IFRS net debt /
adjusted EBITDA ratio of 1.0x is commensurate with this ambition. IWG
announced that net financial debt at 31 March 2024 was $791m.

 

Joint Lead Managers on the Bond transaction were Banco Santander, S.A., Bank
of China Limited, London Branch, Barclays Bank plc, HSBC Bank plc, ING, J.P.
Morgan Securities plc, Lloyds Bank Corporate Markets and Wells Fargo
Securities.

 

IWG was advised on the Transactions by Rothschild & Co.

 

 

Other updates

In the continued process to better present the Company to investors and make
it more easily understood by the market, IWG has in the last 12 months:

·      Transitioned reporting in USD, effective 1 January 2024.
Management assumed a GBP:USD FX rate of 1:1.25 (the 2023 average as previously
disclosed) for adjustments to GBP forecasts

·      Restarted its dividend with a progressive policy

·      Changed its name from IWG plc to International Workplace Group
plc

·      Following its Investor Day in December 2023, started reporting in
three divisions: Company Owned & Leased, Managed & Franchised, Worka

·      Completed a debut debt issuance with a €575m bond

·      Repurchased and retired c.£118m of outstanding convertible bonds
at market price

·      Obtained an investment grade rating of BBB from Fitch

 

The Company would like to remind investors that no stamp duty is payable on
IWG share purchases given that International Workplace Group plc is not
incorporated in the UK.

 

Outlook

IWG maintains its financial expectations for 2024 financial performance and
makes no changes to the outlook statement delivered on 7 May 2024.

IWG is looking forward to making its H1 results announcement on 6 August 2024.

 

 

Financial calendar

6 August 2024                         Interim 2024
results

5 November 2024   Third quarter 2024 trading update

 

 

Further information

 International Workplace Group plc             Brunswick Tel: + 44 (0) 20 7404 5959

 Mark Dixon, Chief Executive Officer           Nick Cosgrove

 Charlie Steel, Chief Financial Officer        Peter Hesse

 Richard Manning, Head of Investor Relations

 

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