7th Nov

Stobart Ready to Deliver?

Following what is understood to have been a successful roadshow assessing the appetite of retail stockbrokers and wealth managers, Stobart Group, the FTSE 250 logistics company is believed to be about to issue a sterling-denominated retail bond.  

The iconic transport and infrastructure company has appointed Canaccord Genuity to manage the launch of its bond which will broaden the range of retail investment opportunities that are available on ORB, and will do much to dispel the myth that the exchange exists only to raise capital for financial services and property-based businesses. Retail Bond Expert is awaiting full terms of the Stobart issue but market sources indicate that the company is looking to raise slightly more than £25m with a coupon around 5.5%.

The issue will allow Stobart to repay some of its existing bank loans and keep its average interest rate at 5 per cent. In general, the company’s balance sheet looks in good shape, with net debt of £223m giving a debt-to-equity ratio of 50 per cent and the debt profile is  long, with a maturity of over five years. It is believed that Stobart will have no problem meeting coupon payments as the cash it generates is more than twelve times its current interest charge; this position will be further strengthened next year by a predicted £145m first revenue contribution following its acquisition of Autologic.

Stobart intends to use the revenue it attracts to develop assets such as its Carlisle airport project, which has finally been given the nod, and will complement its recently opened airport at Southend which has handled 365,000 passengers since it opened in March this year and the company has with a target of between 2m to 2.5m passengers a year.  

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