Lehto Group Plc
20 May, 2022 at 8.30 a.m (EET)
Lehto Group Plc (”Lehto”) announced on 28 April 2022 that it is preparing a financing package to implement its updated strategy. Lehto has signed a binding preliminary agreement on new financing (”Preliminary Agreement”) with OP Corporate Bank Plc (”OP”) and Nordea Bank Plc (“Nordea”). Preliminary Agreement defines the amounts, main conditions and principles of bank financing, and main terms of the convertible bond issuance.
Preliminary agreement is part of approximately EUR 50 million financing arrangement under preparation. Main elements of the financing arrangement are:
- Divestment of Lehto’s pipeline renovation business (approximately EUR +29 million)
- New RCF credit facility from the banks (approximately EUR +13 million)
- RS financing for ongoing and new housing projects (approximately EUR +26 million)
- Issuance of the convertible bond (approximately EUR +15 million)
- The new financing replaces the current RCF credit facility and bilateral bank loans that will be repaid (approximately EUR -32 million)
According to the Preliminary Agreement OP and Nordea are committed to grant a new EUR 13 million RCF credit limit that is valid until 31 March 2024. Additionally, banks are committed to finance so called RS housing projects by approximately EUR 26 million during years 2022-2023. The new financing agreement that will be prepared according to Preliminary Agreement (“New Financing Agreement”) will replace Lehto’s current EUR 25.1 million Revolving Credit Facility (RCF) with a bank syndicate comprising OP Corporate Bank plc, Nordea Bank plc and Swedbank AB.
The validity of the New Financing Agreement is subject to completion of pipeline renovation business divestment, completion of the convertible bond issue as well as repayment of current RCF credit facility and bilateral loans by 30 June 2022. The New Financing Agreement will include securities, financial covenants related to EBITDA and minimum cash requirements, restriction on distributions, and conditions related to company’s operations and constitution and chairman of the board of directors.
The financing package is estimated to improve Lehto’s cash flow approximately by EUR 50 million, whereof majority is expected to occur in year 2022. Apart from divestment of pipeline business financing package does not have an immediate effect on profits. As announced earlier in the stock exchange release on 28 April 2022, divestment of the pipeline renovation business is estimated to have following effects on Lehto’s key figures in year 2022:
- Estimated non-recurring effects
- The result for the financial year 2022 will improve by approximately EUR 30 million
- Equity will improve by approximately EUR 30 million
- Net cash flow in 2022 will improve by approximately EUR 29 million
- The equity ratio will improve by about 6-7 percentage units
- The estimated impact of the divestment on net sales and operating profit in 2022
- Net sales from continuing operations is decreased by approximately EUR -36 million.
- Operating result from continuing operations is decreased by approximately EUR -5 million.
In addition to financial arrangement, as announced earlier, company has carried out personnel reductions and company has outsourced and is still outsourcing land plots in order to improve its profitability and cash flow.
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