Eltel has successfully placed a senior bond issue of 130 MEUR

Eltel announced yesterday after close that it has successfully issued a EUR 130 million senior secured bond with a 4-year maturity and a floating rate of 3m EURIBOR +5.25%. The issuance attracted strong demand from both new and existing institutional investors. Alongside the new bond issue, Eltel repurchased EUR 24m of its outstanding hybrid bonds through a tender offer at 106.5% plus accrued interest, with settlement expected around the bond issue date.

The transaction slightly exceeded the originally communicated size of EUR 120 million, which we view as a positive indication of investor confidence in Eltel’s credit profile and overall direction. While the company’s nominal debt will increase modestly, the improved financial terms and the removal of hybrid bonds will result in a more transparent and balanced capital structure going forward.

We do not expect this refinancing to have a notable impact on Q2 results, as the quarter is largely completed and some one-off transaction costs are likely to be incurred. That said, despite the short-term increase in debt on the balance sheet, we believe the lower cost of capital and the removal of hybrid bonds, which have implications for our EPS estimates, will be earnings-accretive over time. We will update our forecasts no later than in conjunction with the Q2 report.