Sports Direct launches £700m loan refinancing

Mike Ashley’s British sporting goods retailer Sports Direct International (SPD.L) has launched syndication of a £700m (US$950.67m) plus loan refinancing, a senior loan banker said on Wednesday.

The loan, which is not underwritten, is being coordinated by Barclays and HSBC. A bank meeting was held at the company’s Shirebrook headquarters on Wednesday for lenders.

The revolving credit facility will replace a £788m unsecured revolving working capital facility that was due to mature in September 2018.

The deal was originally put in place in May 2014 by a group of 13 banks with Barclays as facility agent and totaled £738m. It was increased to £758m in November 2014 through an accordion feature, and again to £788m in 2016. It paid a margin of between 115bp and 200bp over Libor.

In 2016, the company decided not to renew a £250m shareholder loan from Mike Ashley/Mash Holdings after it was criticized for its use of that loan.

The company used the cheaper shareholder loan to avoid paying utilization fees on the revolving credit, which would have been incurred if more than one third of the revolver was drawn.

Sports Direct made considerable cost savings by using the shareholder loan, which paid around half the interest margin on the revolver and did not have any arrangement or commitment fees.

The arrangement was unusual for a public company, but Sports Direct benefited from savings of over £1m.