Cramo bond issue raises €50m

By Murray Pollok14 April 2009

Cramo is raising €50 million by issuing ‘hybrid capital bonds’, with the funds being used to reduce its interest-bearing debt. The bonds have been bought by Finnish investors, said the company on 15 April.

At the same time the company has negotiated new financial covenant terms for its long-term loans. The new terms include an increase in the allowable gross debt/EBITDA ratio from 3.0 to 3.35 to between 3.5 and 4.5. Cramo said the new terms would improve its debt-equity ratio to about 36-39%, compared to 32.4% at the end of 2008.

Martti Ala-Härkönen, Cramo's chief financial officer, said; "We studied several different financing options, and finally selected a combination whereby we simultaneously issue hybrid bonds to strengthen the Group's capital structure, and on the other hand, arrange more financial headroom to the covenant terms of our long-term loan package." Hybrid bonds do not carry the right to vote at shareholder meetings and do not dilute the holdings of current shareholders.

Meanwhile, at the company's AGM on 1 April, chief executive officer Vesa Koivula said the economic environment continued to weaken in the first quarter of 2009; "The amount of construction is expected to fall in all the Nordic as well Central and Eastern European markets in 2009.

"However, after the first two months of 2009 Cramo's EBITA is still positive, supported by good performance in modular space and satisfactory performance in Sweden, Finland and Norway."

He said the company would continue to reduce costs to protect profitability and cash flow. The company now expects to make €30 million in cost savings in 2009 with its employee headcount likely to fall by over 20% from the high point of August 2008.

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