As a global exhibitions brand, Informa began the pandemic with the need to reschedule 45 large-scale events to later on in 2020 – expos which, when combined with smaller events that had to be rescheduled and those cancelled, would have accounted for around 50% of the firm’s H1 revenue for its Markets and Connect divisions.
With the postponements leaving the firm’s business model intrinsically threatened by the spread of COVID-19, its treasury team speedily arranged a £750m, 18-month backstop credit facility. As well as opening up access to enhanced liquidity, the deal was designed to provide the firm with some optionality during covenant amendment discussions with its US private placement investors.
As if to highlight the extraordinary circumstances, the deal launched and closed within a remarkable time frame of just two weeks, with three banks – BNP Paribas, Santander and HSBC – underwriting £250m each. The package was then syndicated to Informa’s established relationship banks, together with new entrants.
The speed of the deal belies its complexity, with structural talks revolving around the high level of uncertainty that swirled around COVID-19 at the time: how long would the pandemic rumble on for? And what would be its ultimate business impacts? With those fundamentals in mind, the deal was structured in such a way that even in an adverse scenario, Informa and its partner banks would be covered.
Informa moved so quickly on COVID-19 that it announced the deal on 10 March 2020 – on the same day it presented its full-year results for 2019 – in a physical presentation that took place before social distancing had become a widespread preventative measure. The resulting material liquidity increase, revealed at the same event, sent the markets a strong signal that the firm was equipped to weather the difficulties of the coming months.
A subsequent £1bn equity placing further demonstrated that the group had a significant liquidity balance. It also allowed Informa to time access to bond markets later in the year when conditions improved and issue two bonds that allowed the repayment of all US private placement notes and the removal of all financial covenants from debt, pushing the nearest debt maturity out to July 2023.
Informa’s facility was the first of its kind to address COVID-19 uncertainty. The firm benefitted greatly by going early, and going fast.
“An incredibly speedy and effective response. As a profession, we treasurers pride ourselves on responding quickly and efficiently to crisis, and this deal was a triumph of that spirit for a firm with fundamental concerns about its business.”
Providers: BNP Paribas, Santander, HSBC
Structure: £750m, 18-month (+6+6) backstop credit facility for additional liquidity in light of growing concerns around the COVID-19 outbreak.