Fly away success helps Moy Park to secure £200m European bond
Craigavon-based Moy Park has raised £200m on the European bond market as the poultry firm achieves another first for Northern Ireland business.
Brazilian parent company Marfrig revealed the money-making move in an announcement to the Brazilian stock exchange.
It set up a new company, Moy Park (Bondco) plc, to dive into the bond market last month and made Northern Ireland corporate history earlier this year as the first number one company in the province with a woman in charge.
The latest development makes Moy Park one of an elite group of Northern Ireland companies to raise money on the bond markets – and the first company to do so on the European bond market.
It is also the first company outside the energy sector to make the move – viewed as a more reliable way of securing finance than relying on bank and other borrowing.
Marfrig's filing said subsidiary Moy Park (Bondco) had raised £200m on the European market with a seven-year bond at a fixed interest rate of 6.25%.
Economist John Simpson said: "This is quite a strong endorsement by investors across Europe in what Moy Park is doing."
According to Marfrig, the move had enable it to raise money from the debt public markets "at its lowest cost ever".
In a vote of confidence in Moy Park, Marfrig's statement to the stock exchange said: "The quality of the order book was strong, coming from institutional investors in the UK, France, the Netherlands and several other European countries."
The statement adds that the proceeds of the bond issue will be used by Marfrig "to repay existing financial indebtedness".
John-George Willis, head of the corporate department in law firm Tughans, said the bond issue had been successful.
"Investors have reacted well to it, helped by good ratings from ratings agencies," he said. "That positive rating enabled them to achieve a fixed interest rate of 6.25% on a seven-year term which is clearly better than their existing financing.
"The investors will have poured their money in because of the profitability of the business, its excellent maintainable earnings and its very strong management team."
He added: "It's very unusual for a Northern Ireland company to raise money on the bond markets – and it's certainly the first food company to do so."
John Simpson said Mutual Energy, Northern Ireland Electricity and Phoenix Natural Gas had all raised money on the bond market in the past.
"This is a recapitalisation of the whole European operations and it looks as if it's a very successful moment to borrow £200m at an attractive interest rate – especially at a time when interest rates in the UK may begin to edge upwards," he said.
The notes were guaranteed by Moy Park Holdings without having Marfrig as a guarantor, he added. "It's a bond issue in which they have been able to rely on Moy Park's standing alone and not need to rely on the parent company," he said.
Moy Park employs over 5,500 people in factories in Dungannon, Ballymena and Craigavon – and a total of 11,500 people in the UK and Europe.
It is Northern Ireland's number one company, and had £33.8m in pre-tax profits on £1.2bn turnover in its most recent results.