Discl: Held IRL 1.62% and in SM

As I don’t have too much need to look more closely at debt/refinancing across my portfolio, had a closer look at this announcement and I took away the following points from the refinancing:

• Continued proactive management of DBI’s debt portfolio, will have sufficient limits to enable financing of DBI’s NECAP program - repay higher debt and less flexible debt
• Widening the DBI banking group to include 4 new lenders
• Improved the weighted average margin for the facility by 1.5% from 3.26% to 1.56%
• Will reduce interest cost for the next 5 years-ish of ~$75m, so about ~$15m a year - cashflow accretive
• Remains hedged against base rate exposure for ~85% of its drawn down debt and fully hedged against forex exposure - this is positive given that interest rates look to be transitioning to a hike-ish cycle
• Investment grade credit rating remains unchanged after the refinance, and it remains well within debt covenant metrics

This is a good example of why I look at DBI as a “steady growth” company, albeit at much lower growth levels than tech companies, with the full safety net of quarterly dividends, not the other way round.

DBI management is completely incentivised to extract value from reducing cost and whatever cost that is reduced would mostly fall straight into the bottomline and dividend payment pool. This is something to completely like!