Nomad Foods Announces Term Loan Repricing

Rhea-AI Summary

Nomad Foods Limited announced the successful repricing of its existing EUR denominated Term Loan B, resulting in a 75 basis points reduction in the margin to EURIBOR + 2.75%. This is expected to save approximately €1 million in annual cash interest. The company's Chief Financial Officer, Samy Zekhout, highlighted the strength of their operating performance and improving capital market conditions. Noam Gottesman, Co-Chairman and Founder, expressed satisfaction with the results of the refinancing and emphasized the financial flexibility it provides for executing strategic objectives and driving strong shareholder returns.

Positive

• Successful repricing of the Term Loan resulting in reduced cash interest savings
• Strength of operating performance and improving capital market conditions
• Financial flexibility to execute strategic objectives and drive strong shareholder returns

Negative

• None.

Financial Analyst

The repricing of Nomad Foods' Term Loan B to a lower interest rate margin represents a strategic financial maneuver that could signal the company's strong creditworthiness and operational efficiency. By reducing the margin by 75 basis points to EURIBOR + 2.75%, the company is poised to save approximately €1 million in annual cash interest. This could have a positive impact on the company's net income and cash flow, potentially leading to an improved debt-to-income ratio. Investors might view this as a favorable development, as it indicates that the company is managing its debt obligations proactively and taking advantage of favorable capital market conditions.

Moreover, the unchanged maturity date of the loan suggests a stable long-term financial plan. It is essential to note that such interest savings could be reallocated to other areas of the business, such as investment in growth initiatives or shareholder returns, as indicated by the company's Co-Chairman and Founder. This strategic financial decision could be seen as an indication of management's confidence in the company's future performance and its commitment to optimizing capital structure for shareholder value creation.

Market Research Analyst

From a market perspective, the repricing of Nomad Foods' debt could reflect broader industry trends where companies with solid operating performance seek to capitalize on improving capital market conditions. The ability to renegotiate terms and secure lower interest rates can be an indicator of a favorable lending environment and potentially a bullish signal for the sector. It is also indicative of the company's negotiating power and the perceived risk by the lenders.

Investors and analysts often look for such cost-saving measures as they can lead to improved profit margins and operational efficiencies. The market's response to this news may vary, but typically, interest savings and financial flexibility are seen as positive factors that can contribute to a company's competitive advantage. This repricing could also set a precedent for similar companies looking to optimize their financial structures, making it an important point of reference for market comparisons.

Debt Capital Markets Expert

The reduction in interest margin for Nomad Foods' Term Loan B is a noteworthy event in the debt capital markets. The 75 basis point reduction, while seemingly modest, can have a significant impact on the company's interest expense, especially considering the principal amount of €130 million. This transaction reflects the company's ability to leverage its credit profile and the current state of the debt markets to reduce its cost of capital.

Understanding the importance of EURIBOR in this context is crucial. EURIBOR, or the Euro Interbank Offered Rate, is a benchmark rate that represents the average interest rate at which eurozone banks offer to lend unsecured funds to other banks in the euro wholesale money market. A lower margin over EURIBOR suggests that lenders have a favorable view of the company's risk, which could be due to strong financials or positive market sentiment. This refinancing move could also be indicative of a proactive treasury management strategy, aiming to lock in lower rates ahead of potential market volatility or interest rate changes.

FELTHAM, England, Feb. 5, 2024 /PRNewswire/ -- Nomad Foods Limited ("Nomad Foods" or the "Company") announced today that it has repriced its existing EUR denominated Term Loan B of EUR 130 million principal due 2029 (the "Term Loan"). The closing of the repricing of the Term Loan occurred on February 2, 2024, subject to customary closing conditions. Following the closing, the margin on the Term Loan will be reduced by 75 basis points to EURIBOR + 2.75%, which is expected to result in approximately €1 million of annual cash interest savings. There are no changes to the maturity of the Term Loan as a result of this repricing.

Samy Zekhout, Nomad Foods' Chief Financial Officer, stated, "The successful execution of this accretive transaction to reprice our €130 million term loan highlights the strength of our operating performance and improving capital market conditions as we continue to focus on our costs, while executing our growth strategy."

"We are pleased with the results of our refinancing," said Noam Gottesman, Nomad Foods' Co-Chairman and Founder, "We believe that this attractive repricing, coupled with our highly cash generative business model, continues to give us the financial flexibility to execute on our strategic objectives and drive strong shareholder returns."

About Nomad Foods
Nomad Foods (NYSE: NOMD) is Europe's leading frozen food company. The Company's portfolio of iconic brands, which includes Birds Eye, Findus, iglo, Ledo and Frikom, have been a part of consumers' meals for generations, standing for great tasting food that is convenient, high quality and nutritious. Nomad Foods is headquartered in the United Kingdom. Additional information may be found at www.nomadfoods.com.

Enquiries
Investor Relations Contact
Amit Sharma
+1-917-922-0211

Forward-Looking Statements

This press release contains ''forward-looking statements'' that are based on estimates and assumptions and are subject to risks and uncertainties. Forward-looking statements are all statements other than statements of historical fact or statements in the present tense, and can be identified by words such as "targets", "aims", "aspires", "assumes" ''believes'', ''estimates'', ''anticipates'', ''expects'', ''intends'', "hopes", ''may'', ''would'', ''should'', "could", ''will'', ''plans'', ''predicts'' and ''potential'', as well as the negatives of these terms and other words of similar meaning. The forward-looking statements in this press release include, but are not limited to, expectations regarding the Company's ability to consummate the repricing of the Term Loan, the expected reduction of margin and interest rates thereon, the Company's financial flexibility and ability to execute its strategic objectives and growth strategy, and the Company's ability to drive strong shareholder returns. Such forward-looking statements are based on numerous assumptions regarding the Company's present and future business strategies and the environment in which it will operate, which may prove not to be accurate. The Company cautions that these forward-looking statements are not guarantees and that actual results could differ materially from those expressed or implied in these forward-looking statements. Undue reliance should, therefore, not be placed on such forward-looking statements. Any forward-looking statements contained in this announcement apply only as at the date of this announcement and are not intended to give any assurance as to future results. The Company will update this announcement as required by applicable law, including the Prospectus Rules, the Listing Rules, the Disclosure and Transparency Rules, and any other applicable law or regulations, but otherwise expressly disclaims any obligation or undertaking to update or revise any forward-looking statement, whether as a result of new information, future developments or otherwise.

This press release constitutes a public disclosure of inside information by Nomad Foods Limited under Regulation (EU) 596/2014 (16 April 2014) and Implementing Regulation (EU) No 2016/1055 (10 June 2016). The person responsible for making this release on behalf of Nomad Foods Limited is Samy Zekhout, Chief Financial Officer.

This press release does not constitute an offer to sell or the solicitation of an offer to buy any security and shall not constitute an offer, solicitation or sale in the United States or in any jurisdiction in which, or to any persons to whom, such offering, solicitation or sale would be unlawful.

View original content:https://www.prnewswire.com/news-releases/nomad-foods-announces-term-loan-repricing-302053825.html

SOURCE Nomad Foods Limited

FAQ

What is the principal amount of the repriced Term Loan?

The principal amount of the repriced Term Loan is EUR 130 million.

When is the maturity date of the Term Loan?

The maturity date of the Term Loan is 2029.

Who is the Chief Financial Officer of Nomad Foods?

The Chief Financial Officer of Nomad Foods is Samy Zekhout.

Who expressed satisfaction with the results of the refinancing?

Noam Gottesman, Nomad Foods' Co-Chairman and Founder, expressed satisfaction with the results of the refinancing.

What is the expected annual cash interest savings from the repricing?

The repricing is expected to result in approximately €1 million of annual cash interest savings.