Vocus ups debt facility to AU$1.3b

Vocus will be able to carry out its 'strategic initiatives' thanks to a new syndicated debt facility of AU$1.27 billion and NZ$150 million.

Vocus taps Kevin Russell to fill vacant CEO role

Telecommunications provider Vocus has announced closing a new and increased syndicated debt facility amounting to AU$1.27 billion and NZ$150 million, saying it will "provide financial headroom and flexibility".

"Our new and upsized syndicated debt facility has been structured to provide Vocus with the flexibility required to execute its strategic initiatives over the coming years," Vocus CFO Mark Wratten said.

"We would like to thank our existing and new bank group partners for the strong support they have demonstrated."

Its former debt facility of AU$1.1 billion and NZ$160 million was repaid and cancelled, Vocus said, with the telco still expecting its net debt as of June 30 to be between AU$1.03 billion and AU$1.06 billion.

Vocus had in February been forced to again revise its guidance down for the full year after its previous downgrade in financial guidance last year opened it up to a potential class action from its shareholders.

Describing the revision as "modest", Vocus said it expects underlying earnings before interest, tax, depreciation, and amortisation (EBITDA) to be between AU$365 million and AU$380 million rather than the originally stated AU$370 million and AU$390 million due to a change in its consumer strategy to "focus on higher-quality digital channels" and a lower number of energy subscribers than originally hoped.

Underlying net profit is additionally expected to be AU$125 million to AU$135 million instead of AU$140 million to AU$150 million due to higher depreciation and amortisation expenses than previously forecast; while capex will total between AU$180 million and AU$190 million rather than AU$190 million and AU$210 million.

"Whilst facing some short-term earnings headwinds in the Australian Consumer division, the Vocus business has significant growth opportunities available to it and a clear strategy in place to take share in the most attractive market segments; combined with our focus on efficiency and customer experience, the business is well positioned to deliver shareholder returns into the long term," previous Vocus CEO Geoff Horth said earlier this year.

For the first half of FY18, Vocus brought in statutory revenue and income of AU$67.3 million, up 9 percent, for the six-month period, while statutory net profit was AU$37.3 million, down 21 percent. Underlying net profit pre significant items and below-the-line costs of AU$31.3 million was AU$68.6 million, down 25 percent.

Vocus reported statutory EBITDA of AU$188.1 million, up 12 percent; underlying EBITDA pre-significant items of AU$0.7 million was AU$188.8 million, up 1 percent.

In April, Vocus also announced that it would not be selling off its New Zealand business, ceasing all discussions with potential buyers.

"Vocus NZ is an excellent business with strong leadership, an attractive growth profile, a clear competitive position, and a track record of delivering solid returns on capital," Vocus chair Bob Mansfield said.

At the time, Vocus had also provided an update on its debt refinancing, saying its lending syndicate has extended the surge limit on its net leverage ratio for its existing debt facilities, while it was finalising the appointment of several banks to help arrange a complete refinance of its debt facilities.

Vocus had merged with M2 in February 2016 to form the third-largest telecommunications provider in New Zealand and the fourth-largest in Australia, worth more than AU$3 billion.

Vocus was last week awarded a AU$136.6 million contract by the Australian government to construct a telecommunications subsea cable system connecting Papua New Guinea and the Solomon Islands.

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