Sep 2014 Financial News

Agostini’s refinances loans with $275m from Scotiabank

Sep 25, 2014

Publicly traded consumer goods distributor Agostini’s Ltd said in a T&T Securities and Exchange Commission (TTSEC) filing September 16 that it is changing financial institutions and will be refinancing its debt with $275 million from Scotiabank.

“Agostini’s Ltd and its subsidiaries will be repaying all outstanding bonds and instalment loans to Republic Bank Ltd, RBC Bank Ltd, First Citizens Investment Bank Ltd and Citibank. Scotiabank T&T will be refinancing the loan in the amount of $275 million. The loan will be used for the repayment of longterm debt and for working capital purposes,” Agostini’s said in the filing.

Looking at its latest performance, Agostini’s Ltd reported a 14 per cent increase in net profits for the nine-month period to June 2014, along with an 8.0 per cent rise in operating profit.

“Over the last five years, the company reported smooth increases in its after-tax profits, mainly due to its Hand Arnold and SuperPharm acquisitions. However, following the SuperPharm takeover in 2010, profits have been flat, with a 5.0 per cent decline in 2013,” First Citizens analysts said in it September 20 Market Insights.

Agostini’s is trading with a price-earnings (P/E) ratio of 16.7 times earnings, First Citizens said. Its dividend-yield is 2.65 per cent, the analysts said. Saying the company has had “flat projected revenue growth rates following acquisitions” and “negative operating margins post-SuperPharm acquisition,” the analysts said Agostini’s intrinsic price is $13.27 per share though it is trading in the market for $17.25 per share.

When contacted by e-mail and telephone Tuesday, Agostini’s Ltd’s Group chief financial officer Rajesh Rajkumarsingh said a notice was being prepared in accordance with its obligations as a publicly traded company.

Agostini’s Ltd, established in 1925, is a publicly traded company, listed on the T&T Stock Exchange. Its principal areas of business are pharmaceutical and personal care distribution and retail, food, grocery and beverage distribution, building materials sales and construction services and industrial and oilfield product distribution. The majority shareholder of Agostini’s is Victor E Mouttet Ltd (VEML), which owns 50.3 per cent of the shares.

$211 million in borrowings

Agostini’s has a few outstanding debentures with interest rates between 4.50 per cent and 4.0 per cent (up from 2012’s 3.85 per cent) per annum. According to the company’s 2013 (latest) annual report, total borrowings in 2013 reached $211 million, up from $182 million in 2012.

Agostini’s has a debenture over the fixed and floating assets of the group stamped to cover $9.8 million ranking pari passu with FirstCaribbean International Banking & Financial Corporation Ltd (FCIB) registered debenture stamped to cover $33.69 million; a Royal Bank Ltd debenture stamped to cover $50 million, and First Citizens Bank Ltd registered debenture stamped to cover $50 million.

“Certain subsidiaries’ bank borrowings and bank overdrafts are secured by guarantees stamped to cover $38.8 million. The bank overdrafts incur interest at the rate of 6.50 per cent (down from 6.75 per cent in 2012) per annum,” the annual report said.

According to the report, Agostini’s bank borrowings include the following loans:

• A subsidiary’s loan of $8,585,709 (2012:$11,552,344) which is secured by Registered First Demand Debenture over the fixed and floating assets of the company, stamped collateral and mortgage over two real estate properties located at Bergerac Trace, Maraval, and LP#83 and LP#85 Trincity Central Road, Trincity, stamped collateral to cover $19,265,000.

• A subsidiary’s loan of $60,247,204, which is secured by a first mortgage debenture over the fixed and floating assets of the company stamped to cover $65 million. The principal amount of this loan was $65 million repayable by quarterly instalments of $1,830,513 over a period of 15 years with interest at a rate of 7.5 per cent per annum fixed over the first five years.

Agostini’s also has two bonds outstanding, having repaid a five-year 9.25 per cent coupon bond that matured in 2013 that allowed the group to borrow as much as $50 million, according to its annual report.

FCIB letter of credit

The fixed rate eight-year bonds maturing in 2015 are constituted and secured by a trust deed between the group and RBC Trust Ltd incorporating a debenture over Agostini’s Ltd fixed and floating assets stamped to a value of $33,691,970 ranking pari passu with other borrowings. Interest is payable semi-annually in arrears at a fixed rate of 12 per cent per annum.

These bonds are guaranteed by a standby letter of credit established with FCIB to cover the full principal sum of $33,691,970.

Second, a ten-year 8.0 per cent fixed rate bond maturing in 2022 is in the name of Agostini’s Ltd and Hand Arnold Trinidad Ltd and is constituted and secured by a trust deed between the group and First Citizens Trustee Services Ltd incorporating a debenture over Agostini’s Ltd and Hand Arnold Trinidad Ltd fixed and floating assets stamped to a value of $50 million each ranking pari passu with other borrowings.

 

Source:
Aleem Khan
akhan@news.co.tt
Trinidad Guardian, BG4
Thursday September 25, 2014