Led by the ANZ, the new syndicate included BNZ, Bank of China and Rabobank, which was also part of the meat processor’s previous line-up of lenders rounded out by CBA, HSBC and Westpac.
Chief executive Dean Hamilton said $200m of new equity from Shanghai Maling for 50% of the business in December meant it had achieved much better terms from its new syndicate in respect of fees, borrowing costs and less onerous covenants to comply with.
Furthermore, a significant amount of cash still on the company’s balance sheet at the start of the season meant a reduction in the size of the funding line it had asked for from its banks.
“The facilities are much lower given the improvement we have done with our own working capital and also the equity investment made by Shanghai Maling has allowed us to set up a lower level of facilities, which is always good because facility size drives facility fees.”
SFF’s debt peaked at $480m in the 2013 financial year when it came under severe pressure from its banks to recapitalise.
Hamilton said its new arrangements would allow it to draw down up to $200m and included enough headroom to cope with fluctuations in stock flows.
Such was the strength of the company’s balance sheet the new facility would be dipped into only for livestock purchases and funding inventories and other working capital requirements.
The annual $20m earmarked by the company to spend upgrading plants was expected to come from cash and retained earnings.
“We will start with cash and we will go right into the season and have some borrowings and finish with cash on the balance sheet … that is a really strong position.”
Hamilton said each of the banks in its previous syndicate had put their hands up to contribute to the new facility but only Rabobank had been successful.
“They all stuck with us through challenging times.
“Obviously the business is in a really strong financial position now.
“We took the opportunity to go to market and look at what we could achieve in terms of scale and flexibility.
“We have more flexibility and lower priced flexibility than what we have had before.”
The facility would be reviewed after two years.
