EG Group out with $450M and €330M loans to back acquisitions

EG Group Ltd. is out to market with a $450 million term loan B and €330 million second-lien loan to support acquisitions in Germany and the U.K. The debt is being presented alongside the firm's fourth-quarter trading update on a call today, with lender one-on-ones to follow through to March 1, and replies due by 5 p.m. U.K. time/noon ET on March 10 via a Barclays-led group.

The loans are part of a $1.8 billion secured and junior debt raising announced today, that will take net senior and total leverage at the group to roughly 5.5x and 6x, respectively, according to the company.

The new dollar term loan comes with six months of soft-call protection and will mature in March 2026, while the second lien piece has 102, 101 and par call protection, and will mature in April 2027. The firm's existing term loans are due February 2025, while the firm's existing cross-border second lien loans are due 2026. EG's cross-border secured bonds are due February 2025 and October 2025.

The group's existing rating line up is B-/B3/B- (issuer), B-/B3/B (first lien) and CCC/Caa2/CCC (second lien). The outlook is stable from all three.

Barclays (lead-left) and J.P. Morgan are joint physical bookrunners and joint global coordinators, with Rabobank a joint global coordinator on the first lien loan. BofA Securities, Deutsche Bank, ING, Lloyds, Morgan Stanley and SMBC are also bookrunners on this tranche. On the second lien, Barclays is lead-left and a bookrunner with BofA Securities, Deutsche Bank, HSBC, Lloyds, Morgan Stanley and Rabobank.

Proceeds from the new financing will principally support the acquisition of a network of 286 petrol station forecourts in southern Germany from OMV Deutschland for €485 million and a network of petrol stations, car washes and ancillary land from British supermarket group ASDA for £750 million. The OMV deal was announced in December last year with news of the ASDA deal following in February. EG Group shareholders, the Issa brothers and TDR Capital, also announced the completion of their acquisition of ASDA from Walmart on Feb. 16.

EG also updated today on its performance for the full year 2020, to report an increase in EBITDA of 10% on a like-for-like basis and 48% on a reported basis to $1.272 billion. Full year like-for-like performance in Grocery & Merchandise was in line with 2019, while there was a decrease of 13% in Foodservice performance due to temporary shutdowns at the outbreak of the COVID-19 pandemic.

COVID-19-related disruption also hit the firm's fourth-quarter, with reduced footfall and fuel volume and Foodservice sales due to lockdowns. EG notes that all of its British and Irish sites have reopened, adding that 27 new-to-industry sites opened across the group during 2020. Available liquidity headroom as of December stood at $1.284 billion.

The firm's debt was initially steady in the secondary market ahead of the debt launch, but has slid this afternoon with the firm's term loans down by around a quarter of a point on the bid to 99.125/99.750. The loans have been generally strong all year, and were quoted in a 99.50/100 market earlier in the week. In bonds, the group's 4.375% euro notes due February 2025 have softened this afternoon to 98.625/99.750, from 99.375-bid yesterday, while the euro 6.25% notes due October 2025 are at 102.875/103.125, down from 103.5-bid yesterday.

EG Group is one of the five largest issuers in the S&P European Leveraged Loan Index, based on the amount outstanding. It operates convenience store-based filling stations and was founded in 2001 as Euro Garages Ltd. by brothers Zuber and Mohsin Issa.