Spar-owner BWG frees up €33m for acquisitions after refinancing deal

Dutch lender Rabobank joins the retail group’s lending consortium

Johannesburg-listed Spar South Africa, which owns an 80 per cent stake in BWG, referred briefly to the deal in its interim financial results yesterday. Photograph: Dara Mac Dónaill

Johannesburg-listed Spar South Africa, which owns an 80 per cent stake in BWG, referred briefly to the deal in its interim financial results yesterday. Photograph: Dara Mac Dónaill

 

BWG Foods, the owner of the Spar franchise in Ireland, has refinanced its debts estimated at about €220 million. It is understood the new banking facility has freed up a €33 million war chest for BWG to spend on fresh acquisitions.

As part of the refinancing deal, Dutch lender Rabobank has joined the retail and wholesaling group’s banking consortium, which also includes AIB, Bank of Ireland and Barclays.

Johannesburg-listed Spar South Africa (SSA), which owns an 80 per cent stake in BWG, referred briefly to the deal in its interim financial results yesterday. SSA did not reveal the value of the refinancing, while BWG was unavailable for comment. The debts stood at €220 million when a previous refinancing was announced in 2015, and are thought to remain close to that level.

Growth

SSA reported to its investors that sales at BWG, which has unlimited status and does not file accounts, rose 2.9 per cent to €730 million in the six months to the end of March.

It revealed that Storm Emma, which paralysed Ireland shortly before Easter and sparked panic sales of bread and other food items, helped drive “significant turnover growth” at BWG, which also owns the Mace brand.

“The business recorded significant turnover growth in the month of March, not only impacted by the earlier Easter, but also driven by the major storm weather that closed down large portions of Ireland and the United Kingdom as consumers bought in large quantities of food and beverages,” said SSA.

The group’s network of more than 1,300 stores recorded after-tax profits of more than €15 million, the results show.

SSA said that all of BWG’s brands in Ireland, including Spar, Mace, XL Europspar and Londis, recorded solid growth. Its BWG Wine & Spirits and BWG Foodservice brands grew at 11.8 per cent and 18.6 per cent respectively.

“[BWG] group’s management continued to apply strict cost management measures which underpinned the double-digit growth in profit,” SSA said.

The British-based Gilletts group that is owned by BWG recorded growth of 7.4 per cent, and business in its Appleby Westward division in Britain declined due to the loss of two independent retailer groups.

Revenues

Overall, BWG’s British division, which comprises more than 11 per cent of the group, reported revenues down 2.5 per cent in euro, due to the continued weakness of sterling.

BWG’s €14 million acquisition of 4 Aces Wholesale, which gives it a supply line into Gala stores, received regulatory approval and closed in July. The cash freed up by the refinancing gives BWG scope to make further buyouts.

SSA bought an 80 per cent share in BWG in 2014, with the remainder owned by its Irish management team, led by chief executive and former Ibec president Leo Crawford.

Mr Crawford and his fellow shareholders, property director John Clohisey and finance director John O’Donnell, steered the BWG group through the crash, when it suffered due to legacy property debts.