13th Nov

Stobart Retail Bond Issue Confirmed

Stobart ready to deliver Stobart ready to deliver Stobart ready to deliver

As reported by Retail Bond Expert on November 7th, UK haulage business Stobart Group has confirmed that it will be launching a retail bond on the LSE’s Order Book for Retail Bonds (ORB).The logistics company is seeking to raise £25m by issuing bonds that will offer investors a 5.5% coupon, and be redeemed in 2018.

Ben Whawell, Stobart Group CFO, says that the company has been waiting for the UK retail bond market to develop, and feels that it is sufficiently mature to support such an issue.

Private investors have been drawn to the relatively high yields offered by the bonds, particularly in the low-interest savings environment, while companies such as Tesco Bank and Provident Financial have taken advantage of the market’s flexibility by becoming repeat issuers with the benefit of diversification in terms of their corporate borrowing.

The 5.5% coupon offered by Stobart places it between the 4.75% offered by the LSE for its recent launch and the 6.25% offered by property developer St Modwen Group.

Mr Whawell predicts a high level of demand for the issue due to the recognition of the Eddie Stobart brand which has been confirmed as one of the UK's leading business brands by the Superbrands organisation for the sixth year in a row.

Last year's observational documentary, Eddie Stobart: Trucks & Trailers, aired on Channel 5 celebrated the success of the 'nation's favourite haulier' in its ruby anniversary year and followed the company's drivers and employees as they delivered turkeys, Christmas trees and toys in the run-up to the festive period.

The Stobart Members Club was established for those wanting information on the company's fleet of 2,500 trucks as 'Stobart Spotting' fever spread throughout the UK following the series, and sales of merchandise and model trucks reached record levels. The Eddie Stobart brand has also achieved global exposure through its sponsorship of sporting activities including world rallying, football, rugby, horse racing and polo.    

In addition to the highly visible presence of Stobart on UK motorways the group also runs Southend Airport, offers engineering services and sells biomass for energy generation. Mark Glowrey of Canaccord Genuity, which is acting as lead manager on the issue, said the company’s logistics and transport operations would provide strong and recurring cash flows for investors although the bond is unrated by credit rating agencies.

Mr Whawell said there were covenants built into the terms of its bonds that included a “negative pledge around taking on further borrowing”.Last month, Stobart Group reported that underlying pre-tax profit for the six months to August 31 fell to £13.2m, from £16.4m in the same period in 2011, on revenues of £278.5m. The company has almost completed restructuring its underperforming chilled

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