28
June 2024
International Workplace Group plc,
the world's largest hybrid workspace platform with a network in
over 120 countries through flexible workspace brands such as Regus
and Spaces, and the digital services business Worka, issues a
pre-close trading update before the H1 2024 results.
IWG
ISSUES DEBUT EURO INVESTMENT GRADE BOND, EXTENDS DEBT MATURITY
TOTAL DEBT AND OUTLOOK UNCHANGED
International Workplace Group plc
("IWG" or the "Company") is pleased to announce an update to its
financing and capital structure prior to H1 2024 results due to be
released on 6 August 2024.
IWG has successfully completed a
series of debt transactions ("Transactions") that:
· Extend
debt maturity through
o €575m 6.5% (€400m has been swapped to $427.7m 8.153% coupon)
Investment Grade Bond (the "Bond") due June 2030. The
weighted-average coupon is 7.65%
o New
$720m revolving credit facility ("RCF") due June 2029
· Reduce
the face value of the £350m 0.5% convertible bond (swapped to
$445.2m) outstanding to £231.7m (swapped to $294.8m) and
facilitates the eventual repayment of the convertible bond due
December 2027 (the "Convertible Bond")
· Maintains the same level of total debt as reported prior to
the transactions
The above is supported by an
investment grade rating from Fitch of BBB (Stable).
Summary of IWG debt facilities
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Post refinancing
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Pre refinancing
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Description
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Maturity
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Description
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Maturity
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€575m 6.5% bond, of which €400m is
swapped into $427.7m at 8.153%
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June 2030
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£231.7m (face value) convertible
bond, swapped to $294.8m
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Final maturity December
2027
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£350m (face value) convertible bond,
swapped to $445.2m
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Final maturity December
2027
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$720m RCF facility
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June 2029
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$1,107m RCF facility of which £366m
was drawn as at 31 December 2023
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November 2025
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Simultaneous to closing of the Bond,
IWG has entered into hedging arrangements to swap €400m (c.70%) of
the issuance and the related interest into $427.7m, with a
weighted-average coupon of 8.153%. The hedge will remain in place
for the life of the bond and has qualified for hedge accounting
with amortisation of associated fees over a 6-year period. The
remaining 30% of the issuance (€175m) and the related interest at a
coupon of 6.50% will remain in Euros as these amounts are
anticipated to be covered by a natural currency hedge due to the
anticipated geographic diversity of operations of the Company.
Accordingly, the weighted average interest cost on the new debt is
7.65%.
The Company intends to use the
proceeds of the Bond and its renewed RCF facilities to repay the
Convertible Bond and reduce RCF drawings. As part of the
Transactions and as already announced, IWG has repurchased £118.3m
face value of the convertible bond for cancellation for a
consideration of £109.0m. The same Investors also placed orders in
the Bond offering totaling €75m.
After the transactions described
above, the Company's total debt remains the same.
A summary of the new debt issuances
and debt paydown is outlined below:
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Sources
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Uses
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New €575m 6.5% bond
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$615m
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Repayment of drawn
RCF(1)
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$465m
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Buyback of convertible
bond
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$150m
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Total sources
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$615m
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Total Uses
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$615m
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Note: FX assumed GBP:USD of 1:1.27;
EUR:USD of 1.07.
(1) Illustrative, based on £366m
drawn RCF as at 31 December 2023.
Both IWG as a Group and the Bond
itself has investment-grade rating of BBB (Stable) assigned by
Fitch, which has been confirmed. IWG is committed to maintaining
its investment grade rating and believes that the previously
announced capital allocation policy which targets a pre-IFRS net
debt / adjusted EBITDA ratio of 1.0x is commensurate with this
ambition. IWG announced that net financial debt at 31 March 2024
was $791m.
Joint Lead Managers on the Bond
transaction were Banco Santander, S.A., Bank of China Limited,
London Branch, Barclays Bank plc, HSBC Bank plc, ING, J.P. Morgan
Securities plc, Lloyds Bank Corporate Markets and Wells Fargo
Securities.
IWG was advised on the Transactions
by Rothschild & Co.
Other updates
In the continued process to better
present the Company to investors and make it more easily understood
by the market, IWG has in the last 12 months:
· Transitioned reporting in USD, effective 1 January 2024.
Management assumed a GBP:USD FX rate of 1:1.25 (the 2023 average as
previously disclosed) for adjustments to GBP forecasts
· Restarted its dividend with a progressive policy
· Changed its name from IWG plc to International Workplace Group
plc
· Following its Investor Day in December 2023, started reporting
in three divisions: Company Owned & Leased, Managed &
Franchised, Worka
· Completed a debut debt issuance with a €575m bond
· Repurchased and retired c.£118m of outstanding convertible
bonds at market price
· Obtained an investment grade rating of BBB from
Fitch
The Company would like to remind
investors that no stamp duty is payable on IWG share purchases
given that International Workplace Group plc is not incorporated in
the UK.
Outlook
IWG maintains its financial
expectations for 2024 financial performance and makes no changes to
the outlook statement delivered on 7 May 2024.
IWG is looking forward to making its
H1 results announcement on 6 August 2024.
Financial calendar
6 August 2024
Interim 2024 results
5 November 2024 Third quarter 2024 trading
update
Further information
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International Workplace Group plc
Mark Dixon, Chief Executive
Officer
Charlie Steel, Chief Financial
Officer
Richard Manning, Head of Investor
Relations
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Brunswick Tel: + 44 (0) 20 7404 5959
Nick Cosgrove
Peter Hesse
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