Relais about to issue a hybrid bond

Translation: Original published in Finnish on 9/16/2025 at 7:46 am EEST.

The background for the issuance is the TVH acquisition made in the spring and financing it with a bridge loan. In connection with the acquisition, the company stated that it would refinance the bridge loan with equity financing. Thus, the hybrid bond issue was a rather expected solution.

The company is considering issuing a hybrid bond of 40 MEUR

Relais announced on Monday that it is considering issuing a new unsecured, unsubordinated, undated hybrid bond with an estimated nominal value of 40 MEUR. According to the company, the issue is intended to be implemented in the near future, market conditions permitting, and its net proceeds would be used to refinance the bridge loan related to the acquisition and for Relais' general corporate purposes.

Opting for equity financing was expected

Relais announced the TVH acquisition last April, which it financed with a bridge loan granted by its main financing bank, Nordea. This was a loan with a maximum term of 18 months, which the company also stated it would refinance partially or entirely with equity financing. Against this background, the issuance of a hybrid bond or, for example, alternatively raising equity from financiers was expected in the short term.

A hybrid bond is considered equity financing in IFRS accounting, thus reducing the company's net debt. Against this backdrop, a 40 MEUR hybrid bond would reduce the company's net debt to approximately 107 MEUR (Pro forma net debt, excluding lease liabilities). This corresponds to a net debt/EBITA ratio of around 2.3x with our 2026 earnings forecast, which fully accounts for the earnings impact of the completed acquisitions. Thus, the hybrid bond issue would bring the company's indebtedness to a very reasonable level and, in our view, would enable the continuation of inorganic growth already in the short term, also considering the continuous deleveraging effect of the business's cash flow.

There are few recent references for hybrid bond issues, but considering Relais' current financial position, business risk profile, and current interest rate levels, we estimate that the interest rate could settle at around 7-8%. At this interest rate, we would consider the hybrid bond issue to be a well-justified move, taking into account the relatively higher cost of equity financing and the current valuation of Relais' share. Our forecasts do not include assumptions about the form or price level of equity financing, so we will update our forecasts once the issuance takes place, presumably in the near future.