XBP Europe Holdings, Inc. Completes $48 Million Financing to Fund Growth
XBP Europe Holdings has completed a $48 million financing agreement to boost growth and refinance existing debt.
The agreement, signed with HSBC UK Bank plc, includes a $4 million Term Loan A, an $11 million Term Loan B, and a $15 million revolving credit facility, with an $18 million accordion feature.
This financing provides up to $33 million in incremental liquidity, aiding the company's digital transformation goals and inorganic growth strategies.
The term loans have a four-year maturity, while the revolving credit facility has a three-year maturity, extendable by one year at HSBC's discretion.
Repayment of existing debt incurred no penalties, and the new revolving credit facility will be utilized for general corporate purposes.
- Secured $48 million financing agreement.
- Provides up to $33 million in incremental liquidity.
- No penalties incurred for repaying existing debt.
- Term loans and revolving credit facility subject to HSBC's discretion for extension and accordion feature availability.
The completion of a $48 million financing deal by XBP Europe Holdings, Inc. signals a strategic move that could have both short-term and long-term implications for the company. By refinancing existing indebtedness and securing incremental liquidity, the company is positioning itself to manage current financial obligations while also setting the stage for growth. This is particularly relevant in an environment where access to capital can dictate the pace of digital transformation initiatives.
The $33 million incremental liquidity is a significant boost, especially considering the current interest rate conditions. The financing structure, which includes different tranches such as Term Loan A, Term Loan B and a multicurrency revolving credit facility, offers flexibility. The applicable reference rate plus 3.25% is relatively moderate given the current market conditions, which indicates a favorable negotiation by XBP Europe.
From a financial perspective, the removal of penalties for the repayment of existing debt is noteworthy. Penalty clauses in refinancing deals can sometimes erode the benefits of such financial maneuvers, so avoiding them is a clear positive. The long maturity terms of the loans (four years for Term Loans and three years for the Revolving Credit Facility with the option to extend) also provide a stable runway for financial planning.
Retail investors should see this as a sign of solid financial management and a commitment to growth, albeit with the usual risks associated with borrowing and expansion strategies in a volatile market.
For a company like XBP Europe, which operates in the bills, payments and digital transformation space, securing incremental liquidity is vital. The financing deal with HSBC UK Bank plc not only addresses immediate financial needs but also enables the company to capitalize on growth opportunities, including potential acquisitions. The availability of an $18 million accordion feature provides additional flexibility to tap into more funds if needed, which could be leveraged for inorganic growth strategies.
This strategic move suggests that XBP Europe is preparing to expand its footprint in the digital payments landscape. The digital transformation market is highly competitive and having a strong liquidity position can give XBP Europe an edge over rivals by allowing it to invest in technology, enhance service offerings and potentially enter new markets.
For retail investors, the key takeaway is that this financing agreement could lead to accelerated growth and potential market share gains. However, it's important to monitor how effectively the company utilizes this capital and whether it translates into tangible improvements in financial performance and market positioning.
Transaction Refinances Existing Indebtedness and Secures Incremental Liquidity to Fund Growth
Financing includes
LONDON, United Kingdom and SANTA MONICA, Calif., June 27, 2024 (GLOBE NEWSWIRE) -- XBP Europe Holdings, Inc. (“XBP Europe” or the “Company”) (NASDAQ: XBP), a pan-European integrator of bills, payments, and related solutions and services seeking to enable the digital transformation of its clients, today announced that certain of the Company’s subsidiaries have entered into a comprehensive financing agreement with HSBC UK Bank plc (“HSBC”). The new agreement refinances the Company’s UK subsidiary's existing indebtedness and provides up to
“The strategic financing transaction with incremental borrowing capacity greatly enhances our liquidity and supports our runway for growth, including inorganic growth,” said Andrej Jonovic, Chief Executive Officer of XBP Europe.
The new
The proceeds from the Term Loan A and Term Loan B facility were used to repay existing indebtedness under the Company’s UK subsidiary’s prior term loans and revolving credit facilities. No penalties were incurred in connection with such repayment. The proceeds from the Revolving Credit Facility will be used for general corporate purposes.
1 Term Loan A and the Revolving Credit Facility are denominated in British Pounds, and Term Loan B is denominated in Euros. USD figures are determined based on current exchange rates of approximately GBP/USD of 1.26 and EUR/USD of 1.07.
Forward-Looking Statements
This press release contains certain “forward-looking statements” within the meaning of the United States Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Exchange Act, including certain financial forecasts and projections. All statements other than statements of historical fact contained in this press release, including statements as to future results of operations and financial position, revenue and other metrics planned products and services, business strategy and plans, objectives of management for future operations of XBP Europe, market size and growth opportunities, competitive position and technological and market trends, are forward-looking statements. Some of these forward-looking statements can be identified by the use of forward-looking words, including “may,” “should,” “expect,” “intend,” “will,” “estimate,” “anticipate,” “believe,” “predict,” “plan,” “targets,” “projects,” “could,” “would,” “continue,” “forecast” or the negatives of these terms or variations of them or similar expressions. All forward-looking statements are subject to risks, uncertainties, and other factors which could cause actual results to differ materially from those expressed or implied by such forward-looking statements. All forward-looking statements are based upon estimates, forecasts and assumptions that, while considered reasonable by XBP Europe and its management, as the case may be, are inherently uncertain and many factors may cause the actual results to differ materially from current expectations which include, but are not limited to: (1) the outcome of any legal proceedings that may be instituted against XBP Europe or others and any definitive agreements with respect thereto; (2) the inability to meet the continued listing standards of Nasdaq or another securities exchange; (3) the risk that the business combination disrupts current plans and operations of XBP Europe and its subsidiaries; (4) the inability to recognize the anticipated benefits of the business combination, which may be affected by, among other things, competition, the ability of XBP Europe and its subsidiaries to grow and manage growth profitably, maintain relationships with customers and suppliers and retain its management and key employees; (5) costs related to the business combination; (6) changes in applicable laws or regulations; (7) the possibility that XBP Europe or any of its subsidiaries may be adversely affected by other economic, business and/or competitive factors; (8) risks related to XBP Europe’s potential inability to achieve or maintain profitability and generate cash; (9) the impact of a potential resurgence of the COVID-19 pandemic, or the occurrence of a similar outbreak; (10) volatility in the markets caused by geopolitical and economic factors; (11) the ability of XBP Europe to retain existing clients; (12) the potential inability of XBP Europe to manage growth effectively; (13) the ability to recruit, train and retain qualified personnel, and (14) other risks and uncertainties set forth in the sections entitled “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements” in the Annual Reports on Form 10-K filed on April 1, 2024 and, our subsequent quarterly reports on Form 10-Q and our current reports on Form 8-K as filed with the Securities and Exchange Commission (the “SEC”). These filings identify and address other important risks and uncertainties that could cause actual events and results to differ materially from those contained in the forward-looking statements. Nothing in this press release should be regarded as a representation by any person that the forward-looking statements set forth herein will be achieved or that any of the contemplated results of such forward-looking statements will be achieved. Readers should not place undue reliance on forward-looking statements, which speak only as of the date they are made. XBP Europe gives no assurance that either XBP Europe or any of its subsidiaries will achieve its expected results. XBP Europe undertakes no duty to update these forward-looking statements, except as otherwise required by law.
About XBP Europe
XBP Europe is a pan-European integrator of bills, payments and related solutions and services seeking to enable digital transformation of its more than 2,000 clients. The Company’s name – ‘XBP’ – stands for ‘exchange for bills and payments’ and reflects the Company’s strategy to connect buyers and suppliers, across industries, including banking, healthcare, insurance, utilities and the public sector, to optimize clients’ bills and payments and related digitization processes. The Company provides business process management solutions with proprietary software suites and deep domain expertise, serving as a technology and services partner for its clients. Its cloud-based structure enables it to deploy its solutions across the European market, along with the Middle East and Africa. The physical footprint of XBP Europe spans 15 countries and 32 locations and a team of approximately 1,500 individuals. XBP Europe believes its business ultimately advances digital transformation, improves market wide liquidity by expediting payments, and encourages sustainable business practices. For more information, please visit: www.xbpeurope.com.
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Source: XBP Europe Holdings, Inc.
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