Strauss Group Ltd. (TASE:STRS) has ensured NIS 234 million in financing for itself, plus a NIS 78 million line of credit, for acquiring the 25.1% stake of US fund TPG Capital, its partner, in Strauss Coffee, Strauss Group's subsidiary. The €257 million (NIS 1 billion) deal was reported last week.
Strauss today reported to the Tel Aviv Stock Exchange (TASE) that it had concluded a financing agreement with a financial institution to replace its NIS 434 million short-term loan at 1.5-2% annual interest. The institution in question is Harel Insurance Investments and Financial Services Ltd. (TASE: HARL). Strauss Group paid €172 million of the deal price with its own resources and the short-term loan when the agreement was signed.
Strauss Group will pay the remaining €85 million by mid-August. Strauss Group will also redeem options totaling €17 million allocated to Strauss Coffee executives, or convert the options into up to €2 million in Strauss Group options.
The loan reported by Straus Group today is for a maximum of 10 years, while the line of credit has no time restriction. The loan will be repaid in 10 equal annual installments.
The loan is unlinked at 2.5-3.5% fixed interest. plus an additional 0.5% whenever one of the following events occur: the ratio of equity to the balance sheet drops below 30%, the debt coverage ratio exceeds 2.5, and the debt coverage ratio exceeds 3. If the conditions for demanding immediate repayment of the debt are fulfilled, the interest rate on the debt will be increased by 1.5%. Strauss Group will pay fixed shekel interest on the line of credit equal to the yield on government bonds with the same duration as the loan, plus a margin of 1-2%.
After five years have passed since the principal of the loan was provided, Strauss Coffee shall be entitled to repay the loan early on the date for payment of the interest. The amount repaid early shall not be less than NIS 10 million, and shall be in multiples of NIS 10 million. In event of early repayment, Strauss shall pay the lender an early repayment fee.
The agreement includes various grounds for demanding immediate repayment of the loan: events with a materially negative impact on Strauss Coffee's business, assets, financial situation, business results, or ability to meet its obligations under the agreement; the termination of Strauss Coffee's business in Israel, other than as a result of a general economic event; the termination of Strauss Coffee's operations in the food and beverages sector without the lender's consent; a material breach of the agreement, including a failure to meet the financial criteria; and a change in the controlling interest in Strauss Coffee or its parent company, other than as defined in the agreement.
Published by Globes [online], Israel Business News - www.globes-online.com - on April 2, 2017
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