Michael Hill Refinances $90m Debt, Extends Maturity to 2028 with Improved Margins
Michael Hill International has successfully refinanced its $90 million debt facility, securing improved margins and extending the term to August 2028 with the addition of Commonwealth Bank as a new lender.
- Refinancing extends debt maturity to August 31, 2028
- Improved interest margins secured on existing $90m core facility
- Seasonal $20m uplift facility retained for four months annually
- New lender Commonwealth Bank joins existing ANZ banking partners
- Subsidiaries guarantee company obligations under the facility
Refinancing Secures Longer-Term Stability
Michael Hill International Limited (ASX/NZX – MHJ) has announced a successful refinancing of its debt facility, extending the term by two years to August 31, 2028. This move comes with improved margins, signaling a positive development in the company’s cost of capital and financial flexibility. The refinancing is subject to customary conditions precedent, a standard step before finalisation.
Maintaining Core Facility Limits with Seasonal Flexibility
The company’s core facility remains at $90 million, complemented by a seasonal uplift of $20 million available for four months each year starting mid-September. This seasonal feature is designed to support working capital needs during peak trading periods, reflecting the retail nature of Michael Hill’s jewellery business. The refinancing preserves these limits, ensuring continuity in the company’s liquidity management.
New Lender Joins Established Banking Partners
Australia and New Zealand Banking Group Limited (ANZ) and ANZ Bank New Zealand Limited continue as long-term banking partners, while Commonwealth Bank of Australia (CBA) joins as a new lender. The addition of CBA diversifies Michael Hill’s banking relationships, potentially enhancing its financial resilience and negotiating power going forward.
Standard Terms and Guarantees Reflect Prudence
The facility agreement includes typical provisions such as repayment conditions, financial covenants, guarantees from each subsidiary, and events of default clauses. These terms are standard for corporate debt facilities and provide both lender protection and operational discipline for the company. Subsidiary guarantees underscore the integrated nature of Michael Hill’s corporate structure.
Looking Ahead
With a stable and improved debt structure in place, Michael Hill is positioned to focus on its retail operations across Australia, New Zealand, and Canada. The refinancing reduces refinancing risk in the near term and may support future strategic initiatives or capital management decisions.
Bottom Line?
Michael Hill’s refinancing strengthens its financial footing, but investors will watch how the company leverages this stability amid retail sector challenges.
Questions in the middle?
- What specific margin improvements were achieved in the refinancing?
- How might the new lender relationship with Commonwealth Bank influence future financing options?
- Are there any changes to financial covenants that could impact operational flexibility?
