Eltel evaluates the possibility to issue senior bonds of 120 MEUR

Eltel announced this morning that it is considering the issuance of a new EUR 120m senior secured floating rate bond with a 4-year tenor. The company has initiated investor meetings to explore interest, and the transaction may follow depending on market conditions. Proceeds would be used to repay refinancing debt, including its existing sustainability-linked hybrid bonds (SE0019914250). These bonds will be subject to a tender offer at 106.5% of par plus accrued and unpaid interest. The remaining net proceeds will be used for general corporate purposes, including investments and potential acquisitions.

This move was largely anticipated from our side. While the specific terms of the potential new bonds have not yet been disclosed, we expect that they will allow Eltel to refinance its existing debt on more favorable terms. Although the hybrid bonds do not have a fixed maturity date, their cost of financing would have become more expensive after the so-called reset date in July 2026.

At the end of Q1’25, Eltel’s total interest-bearing debt (excluding leases) amounted to 73 MEUR and when including the hybrid bonds of 25 MEUR (recorded as equity), total debt (excluding leases) amounted to around 100 MEUR. As such, we anticipate a modest increase in Eltel’s debt levels, likely at more favorable terms, while also enhancing the maturity profile of the company’s debt finance. Given Eltel’s recent track record of improved profitability, operational efficiency, and cash conversion (which has enabled deleveraging to a reasonable Net debt/EBITDA ratio of 2.1x, excluding the hybrid bonds), we view this refinancing initiative as a strategic step toward lowering its cost of capital. We will revisit our estimates once the bond pricing is confirmed and the refinancing timeline is finalized.