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DDM Holding AG
DDM Debt AB
DDM Debt AB: Q1 2017 report
EUR 85 million bond issued at significantly lower interest rate to support major growth in the coming months
Highlights first quarter 2017
- Net collections of EUR 6.0M
- Cash EBITDA of EUR 4.9M
- Net profit for the period of EUR 0.5M
- Loan repayments of approximately EUR 3.4M relating to the EUR 11M bond were made in January, prior to the full redemption of the remaining EUR 3.1M outstanding nominal amount in February
- EUR 50M of senior secured bonds at 9.5% issued in January and listed on Nasdaq Stockholm
- DDM Debt used part of the proceeds to acquire DDM Treasury Sweden AB’s subsidiaries holding the portfolios on 17 February and to refinance existing debt within the DDM Group, and the remaining balance of about EUR 10M will be used for future portfolio acquisitions
Significant events after the end of the first quarter
- EUR 35M of senior secured bonds issued in April in a tap issue under the EUR 85M senior secured bond framework at a price of 101.5%, representing a yield to maturity of c. 9%
Comment by the CEO
As a result of the financing activities during the quarter, at the end of the period DDM Debt had a significant cash balance of EUR 15.6M, of which approximately EUR 10M relates to the net proceeds from the bond refinancing. In addition, DDM Debt raised a further EUR 35M from the tap issue performed shortly after the end of the quarter.
The financing activities carried out mean that the company is now positioned to capitalize on the significant pipeline we have, and due diligence is ongoing on a number of large portfolios where the company is in an advanced stage of the investment process. The focus continues to be on our existing markets, and in addition some neighboring countries where we are evaluating both consumer and corporate portfolios. We foresee being able to release information about some of these transactions before the end of the current quarter.
As mentioned above, a number of significant events took place during the quarter to support continued strong growth. DDM Debt successfully issued EUR 50M of senior secured bonds in January under a framework totaling EUR 85M. The new bonds have a final maturity date in January 2020 and a 9.5% coupon rate, which is significantly lower than our previous financing cost. This was an important step in improving the capital structure. The bonds are listed on the Corporate Bond list at Nasdaq Stockholm. Part of the proceeds were used to refinance existing debt within the DDM Group, including the redemption of the remaining outstanding nominal amount under the EUR 11M bond issued in 2016. DDM Debt also used part of the proceeds to acquire DDM Treasury Sweden AB’s subsidiaries holding the portfolios on 17 February, allowing DDM Treasury Sweden to redeem its SEK 300M bond loan.
Shortly after the end of the first quarter DDM Debt successfully completed a EUR 35M tap issue under the EUR 85M senior secured bond framework. The bond tap issue was placed at a price of 101.5%, representing a yield to maturity of c. 9%. The tap issue is the next step to support the continued strong growth.
Net collections and cash EBITDA (net collections less operating expenses) were strong in the first quarter, amounting to EUR 6.0M and EUR 4.9M respectively.
Cash flow from operating activities before working capital changes for the first quarter was EUR 4.5M, due to the continued strong performance of the Slovenian portfolio, in addition to cash flows from the portfolios held by the subsidiaries acquired from DDM Treasury Sweden on 17 February. On the back of the strong cash flows, in accordance with the terms and conditions of the EUR 11M bond issued in July 2016, repayments of approximately EUR 3.4M were made in January, prior to the repayment of the remaining outstanding nominal amount in February as part of the aforementioned bond refinancing.
We continue to see a strong pipeline of portfolios for sale across our region in both existing and potential new markets, with returns and characteristics that match our investment criteria. We are well placed to continue our rapid expansion, as DDM continues to receive a significant number of invites to bid for attractive portfolios.
With the strong cash flows, recent bond refinancing and tap issue we remain positive on the outlook for DDM and feel confident that we will be able to continue to deliver according to our strategy.
DDM Debt AB (publ) intends to publish financial information on the following dates:
Interim report for January – June 2017: 3 August 2017
Interim report for January – September 2017: 2 November 2017
Full year 2017 report: February 2018
CEO Gustav Hultgren and CFO Fredrik Olsson will comment on the DDM Group’s results during a conference call on 11 May 2017, starting at 10:00 a.m. CET. The presentation can be followed live at www.ddm-group.ch and/or by telephone with dial-in numbers: SE: +46 8 566 426 95, CH: +41 225 675 548 or UK: +44 203 008 9818.
The information in this interim report requires DDM Debt AB (publ) to publish the information in accordance with the EU Market Abuse Regulation and the Securities Market Act. The information was submitted for publication on 11 May 2017 at 8:00 a.m. CET.