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
| Post refinancing | | Pre refinancing | |
| Description | Maturity | Description | Maturity |
| €575m 6.5% bond, of which €400m is swapped into $427.7m at 8.153%
| June 2030 | | |
| £231.7m (face value) convertible bond, swapped to $294.8m | Final maturity December 2027
| £350m (face value) convertible bond, swapped to $445.2m
| Final maturity December 2027 |
| $720m RCF facility | June 2029 | $1,107m RCF facility of which £366m was drawn as at 31 December 2023 | November 2025 |
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:
| Sources | | Uses | |
| New €575m 6.5% bond | $615m | Repayment of drawn RCF(1) | $465m |
| | | Buyback of convertible bond | $150m |
| Total sources | $615m | Total Uses | $615m |
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
| International Workplace Group plc Mark Dixon, Chief Executive Officer Charlie Steel, Chief Financial Officer Richard Manning, Head of Investor Relations | Brunswick Tel: + 44 (0) 20 7404 5959 Nick Cosgrove Peter Hesse
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