Flooring group Victoria has secured a major refinancing amid an upturn in recent trading.
The company says the refinancing ‘eliminates near-term equity dilution risk, reduces senior secured debt and preferred shares liabilities by more than £300m, cuts annual finance costs and dividends by £34m and extends debt maturities.’
Under the deal Koch has agreed to release and/or convert and/or amend and/or exchange (as may be applicable) its preferred shares along with its accrued PIK, totalling about £380m.
Preferred shares with a stated value of £50m will be retained, including the right to extend the conversion date to 2031 and reduce the dividend rate from 12.6% to 8% if paid in the form of PIK dividends;
The remaining preferred shares will be redesignated into about 33.2million new shares, which would see Koch and Wood River Capital own 24.9% of shares. However, these shares will be cancelled and replaced by about €20.5m of new second priority notes due in 2031; a non-interest-bearing contingent value right with a balance sheet liability of about £34m.
The senior secured note holders who agreed to the refinancing – they own €166.6m of notes with an interest rate of 3.75% – will receive their pro rata share of up to €125m of new preference notes due in 2031 at an exchange rate of €750 new notes for each €1,000 of existing notes; about 34.8m new shares and a £3m early bird fee.
‘This refinancing transaction is a significant step forward for Victoria and, in particular, for ordinary shareholders. Together with the successful extension of our 2026 note maturities last year, it materially improves Victoria’s financial position and provides runway for our ongoing operational recovery,’ says Geoff Wilding, Victoria executive chairman.
‘The refinancing transaction reduces the senior secured debt and preferred shares liabilities by more than £300m, eliminates the near-term preferred shares conversion right, reduces the dilutive effect of the conversion right and importantly implies an issuance price for the newly issued shares at a premium of more than 400% to the current share price.
‘The value of this reduction will directly benefit our ordinary equity holders, being equivalent to multiples of our current market capitalisation. In our view this is a clear demonstration of both Koch’s and noteholders’ confidence in Victoria’s future value creation potential.’
‘We believe in Victoria’s ability to execute on its profitability improvement plan and are looking forward to supporting the effort,’ says Joe Scribbins, Koch Equity Development md.
The group says it has gained market share this year, praising management for their actions.
‘Trading since the start of the year has been encouraging, with year-on-year like-for-like revenue growth. In particular, this has been driven by the execution of management’s performance initiatives and ongoing market share gains in the UK and Australia.
‘Across the business, management reacted quickly to the disruption caused by the Iran conflict, executing targeted price rises to protect margins and effectively managing the supply chain to mitigate negative impacts,’ it says.
‘FY26 EBITDA performance was broadly in line with guidance notwithstanding the Iran conflict, and Victoria will provide a fuller update when it publishes its FY26 financial results.’
