IR.on AG assisted Karlsberg Brauerei GmbH in the successful completion of its second bond issue, which secured the early refinancing of the corporate bond issued in 2012.
Cologne, 26 April 2017 – The placement of the new five-year EUR 40 million bond was completed just as quickly as the company’s first issue. Due to high demand, the subscription period was closed early on the first day of subscription. The bond was heavily oversubscribed, with private investors accounting for one fifth of the subscriptions.
Established in 1878, the family-owned medium-sized company from the Saarland took advantage of the low interest rates to secure its medium to long-term financing structure. At 5.25 percent, the annual coupon of the new corporate bond was set at the lower end of the 5.25 to 5.75 percent range. Prior to the issue, the company had committed itself to using the proceeds from the issue for the early repayment of its first EUR 30 million bond with a coupon of 7.375 percent. The additional proceeds will be used to co-fund investments aimed at optimising the company’s competitive position.
A major challenge for the communication activities was the market environment for SME bonds. The very difficult situation, not least resulting from the recent insolvencies of fashion company Steilmann and wood pellets producer German Pellets GmbH, led to the financial media taking a very dim view of the market segment. Another challenge for the public offering in Germany and Luxembourg was to explain the special aspects of the transaction - e.g. the fact that the coupon was to be determined only after the end of the subscription period - in direct dialogue primarily with private investors. In this context, the company benefited from its pro-active and transparent capital market communication of the past three-and-a-half years. The strong demand for the issue shows that the company has established itself as a reliable capital market participant and a solid investment in a challenging environment.
The strong demand for the issue shows that the company has established itself as a reliable capital market participant and a solid investment in a challenging environment.
The successful transaction completed by Karlsberg Brauerei shows that solid SMEs with a sustainable orientation and a clear commitment to the capital market stand a good chance of implementing and maintaining a diversified financing structure in the capital market at attractive terms even in the challenging environment currently prevailing in the market.
IR.on AG acted as communication and marketing consultant on this project. The transaction was the 22nd corporate bond issued with assistance from IR.on. The proceeds from these issues totalled over EUR 1.5 billion.