ENIC

[ricky2tricky4city]

Page 37:

The Investec Bank facility used to fund the construction of the new Training Ground and secured against the new Training Ground site was repaid in full on 31 March 2023 and subsequently was nil at the balance sheet date


In September 2019 the Group closed its refinancing of the pre-existing £637,000,000 loans put in place to support the construction of THS and secured against THS. The £637,000,000 stadium refinancing package includes £525,000,000 from issue of long-term bonds to U.S. investors through a private placement and another £112,000,000 from a loan from Bank of America Merrill Lynch, who also managed the bond issue. As at the balance sheet date the refinancing package had an average maturity of 20.5 years and a weighted average coupon of 3.15%.


In June 2021 a further €250,000,000 was raised through the issue of long-term bonds to US investors through a second private placement necessitated by the impact of COVID-19. As at the balance sheet date this tranche of financing had an average maturity of 18.4 years and a weighted average coupon of 2.83%. €50,000,000 of this was used to repay part of the Bank of America Merrill Lynch loan. The remaining £62,000,000 is at an interest rate of 1.4% plus SONIA with a Credit Spread Adjustment.


In March 2023 the facility with Bank of America Merril Lynch was extended by £19,000,000 as part of the debt restructure that saw the Investec loan repaid. The £19,000,000 is at a rate of 1.75% plus SONIA with a Credit Spread Adjustment with a bullet repayment in March 2028.


The earliest maturity date within the refinancing package as a whole is March 2028 and the package has an average maturity of 19.6 years, with a weighted average coupon of 3.14%, net of debt issue costs. The debt stack includes a 30-year tranche, with a bullet repayment in 2051.


The refinancing package is shown in the financial statements net of €4,915,800 of associated loan arrangement costs which are being amortised over the term of the loan.


The Group has a revolving credit facility with HSBC Bank Pl of €50,000,000 expiring in December 2024, also secured against THS. At the balance sheet date €nil (2022: Enil) was drawn.

Gotta love financial arrangement fees...nearly £5m ....'ahh just add it to the loan' spoken like a sweet helpful mortgage broker. roll eyes.

 

[glasgowspur]

My head hurts from reading the last three pages.

 

[ricky2tricky4city]

My head hurts from reading the last three pages.

Hurts more than watching a Jose team?

 

[Finney Is Back]

None of us knows the exact detail, but we can see the average maturity is 19.4 years from this part of the statement:
Over 90% of our financial borrowings of £851.2m, are at fixed rates, with an average interest rate of 2.79%. The average maturity of all our borrowings is 19.4 years, some of which stretch until 2051

And we can see the earliest maturity date of all the bonds is March 2028, so I'm sure Danny has a stern eye on these things.
from page 37 of https://www.tottenhamhotspur.com/media/v24hfkyo/tottenham-hotspur-limited-300623.pdf
I can't copy and paste the text, seems to be an image, can anyone convert page 37 to text using software?
That page also explains the £637m of loans is composed of £525m of bonds and £112m from Merrill Lynch
And also that the £50m drawdown facility with HSBC expires at Christmas

It is very likely that the long dated bonds will have a higher interest rate than the short dated bonds. As the short dated bonds mature we won't be able to get anything like the interest rates we borrowed at previously. I think it is imperative that we start to ensure money is set aside to reduce the debt level.

 

[Finney Is Back]

It was a simple example of a hardly crippling method to pay them off.

I think you're panicking about something that will not be a concern unless the arse falls out of football. (Or we get someone new in that runs us terribly)

We are reducing cash at hand as we try to stay competitive despite the machine being constantly tuned to bring in as much as possible thru the front door...it just all gets mopped up by players/agents/managers, under the constant demands of clubs supporters.
If I was DL I'd be jaded by it tbh. That's why he wants a cash injection, as although he's brought us down this sustainable organic growth route, football inflation runs quicker than that organic growth so we rarely have surplus that can push us through that final ceiling.

I'm not panicking at all. I'm merely stating that we are carrying a high level of debt and won't be able to roll it forward without the interest costs increasing so need to start thinking about how we go about reducing that debt (that has been increasing instead of reducing over the past few years) I suspect the request for capital relates to a mixture of debt reduction along with funding requirements for the hotel and accomodation behind the South stand.

 

[Finney Is Back]

The remaining £62,000,000 is at an interest rate of 1.4% plus SONIA with a Credit Spread Adjustment.

In March 2023 the facility with Bank of America Merril Lynch was extended by £19,000,000 as part of the debt restructure that saw the Investec loan repaid. The £19,000,000 is at a rate of 1.75% plus SONIA with a Credit Spread Adjustment with a bullet repayment in March 2028.

SONIA + 1.75% works out at a rate of about 7% interest now. Just two years ago it would've worked out at under 2%. These are the sorts of differences that I am talking about in the interest rate environment now and why I think the club will absolutely be looking to try to pay off the capital as the loans mature instead of refinancing.

 

[ricky2tricky4city]

I'm not panicking at all. I'm merely stating that we are carrying a high level of debt and won't be able to roll it forward without the interest costs increasing so need to start thinking about how we go about reducing that debt (that has been increasing instead of reducing over the past few years) I suspect the request for capital relates to a mixture of debt reduction along with funding requirements for the hotel and accomodation behind the South stand.

The shorter dated stuff, for sure, that's about 10% of our borrowing and on non fixed rates.

The debt increased because of COVID and we were fortunate to be able to borrow from the government (at silly low rates) and then repay that by returning to the same institutions that consolidated the stadium finance into the bonds. A unforeseen debt event like that is unlikely to happen again anytime soon let's be honest.

The long dated stuff is probably costing us £20-25m a year to service...even if we haven't paid off a bean and the interest rate is double come 2045-50 thats £40-50m a year. (If interest rates are 10-15% then they'll be more to worry about than THFC )

What I then ask is what does a £700-800m debt look like in 2045-50..and have a guess at our turnover in 2045-50?

The final point is what we might do come 2045-50 is probably not DLs worry.

 

[Finney Is Back]

The shorter dated stuff, for sure, that's about 10% of our borrowing and on non fixed rates.

The debt increased because of COVID and we were fortunate to be able to borrow from the government (at silly low rates) and then repay that by returning to the same institutions that consolidated the stadium finance into the bonds. A unforeseen debt event like that is unlikely to happen again anytime soon let's be honest.

The long dated stuff is probably costing us £20-25m a year to service...even if we haven't paid off a bean and the interest rate is double come 2045-50 thats £40-50m a year. (If interest rates are 10-15% then they'll be more to worry about than THFC )

What I then ask is what does a £700-800m debt look like in 2045-50..and have a guess at our turnover in 2045-50?

The final point is what we might do come 2045-50 is probably not DLs worry.

Our debt and borrowings have increased since post covid as well. I've seen numerous companies go to the wall due to having (seemingly safe) long term borrowing only to get caught out when refinancing.

It is difficult to tell what the long dated bonds are costing in interest versus the shorter term bonds. My best guess would be that the longer dated bonds are costing around 1% more than the short term bonds at present. Anything short dated that matures though will cost significantly more when refinanced.

Worth noting that the difference between financing being agreed now versus 3 years or so is proabably more like 3 times higher in terms of interest cost as opposed to double. It is great that we have a bunch of long dated debt but we really don't want to be refinancing any debt that we have that matures in the nearer term, otherwise we'll end up being significantly impacted by interest payments. The total cost of finance in the last set of accounts was already up to £45m. That is not an inconsiderable amount and this will grow further from here unless the debt is reduced in the coming years.