Sligro successfully completed its refinancing project

Orchard Finance was hired as debt advisor in February 2023 to support Sligro in renewing and prolonging its financing arrangements.

With a revenue in excess of €2bln in the Netherlands Sligro is the market leader in the food services market with a nationwide network of Sligro cash-and-carry and delivery service wholesale outlets. Additionally, Sligro is active in Belgium with JAVA Foodservice and Sligro-ISPC. Recently, Sligro has closed its acquisition of the Metro-activities in Belgium.

Sligro’s sources of funding include both the capital markets (for long-term financing), as well as the banking market (for long and short-term financing). As of year-end of 2022, Sligro has two fixed-income USPP loans, consisting of a tranche of € 30mln until April of 2023 and a tranche of € 40mln until September 2025. Furthermore Sligro has a financing arrangement with Rabobank consisting of two loans which mature in 2024, a committed acquisition facility maturing in 2024 and a short-term credit facility.

Considering the consolidation of the acquisition financing of the Metro-activities, the maturing USPP tranche in April of 2023 and the maturity date of its arrangement with Rabobank, Sligro has employed a carefully structured and planned refinancing project from February until April in an effort to lay out the financing structure for the coming years. The financing project was completed on April 24, 2023.

In this project Sligro has researched its opportunities in both the capital markets and the banking market. Taking into account the volatility in the interest rates and capital markets on the one hand, and the huge appetite in the banking market on the other hand, Sligro has chosen to pursue a club deal of € 260mln, with an accordion of € 200mln, in surplus of the outstanding € 40mln USPP tranche. The size of this financing package takes into account, among other things, Sligro’s opportunities for acquisitions and the seasonal pattern of its working capital.

The club deal consists of a three-year facility with two extension options of a one-year, and a one-year facility with one extension one-year. As a result Sligro’s bank financing is transformed from single bank bilateral facility into a club deal with three banks, who have the capacity to provide the accordion if required. This gives the firm the opportunity to optimise its financing in the coming years, depending on circumstances in the capital markets and the realisation of acquisitions. Lastly, the one-year facility enables Sligro to research and implement specific forms of working capital financing.