EI Group to return another £35m to shareholders
EI Group said on Friday that it has completed the first part of the sale of its commercial property portfolio, the proceeds of which will be used to pay down debt and return up to £35m to shareholders via a share buyback programme.
The pub chain formerly known as Enterprise Inns said total proceeds, net of costs, from the sale of the first tranche of the commercial property portfolio comprising 348 of the 370 properties to be sold is £332.7m.
EI said £150m will be used to repay loan and credit facilities, £175.8m will be used to repay loan notes and £7m or so will be held as cash. As a result, it now expects group interest costs to be in the range of £136m to £138m in the current financial year, falling to between £120m and £124m in the year to 30 September 2020.
Taking into account these disposal proceeds, current trading and the continuing "good progress" being made against EI's strategic objectives, the company's board has approved the return of up to an additional £35m to shareholders via a further share buyback programme, which will begin immediately.
Chief executive Simon Townsend said: "Today's announcement is a significant milestone for the business and evidence of our ability to unlock value across our estate and realise attractive cash proceeds for shareholders.
"This disposal will allow us to focus on driving growth across our core Publican Partnerships, Managed Operations and Managed Investments businesses, while also reducing our debt and delivering further shareholder value. With that in mind, we are pleased to announce a further £35 million share buyback programme, in addition to the £20 million programme we completed in January."
At 1120 GMT, the shares were up 2.7% to 206.50p.
Liberum analyst Anna Barnfather said the scope of the buyback leaves headroom for future returns and future monetisation events.
"We continue to see upside to the share price through de-risking the balance sheet and closing the gap to NAV which stood at 356p prior to this announcement," she said.