Verve places new 500 MEUR bond and redeems existing bonds early

Verve announced yesterday that the company has successfully placed a new 500 MEUR senior unsecured bond under a 650 MEUR framework. The bond has a four-year duration and carries a yield of three-month EURIBOR plus 4.00% per annum. This represents a notable reduction in financing costs compared to the 2026 and 2027 bonds, which carried a fixed coupon rate of 6.25% and 7.25%, respectively (+3m EURIBOR). As a result, Verve's weighted average interest rate on outstanding bonds will decrease by approximately 2.7%.

Verve intends to use the proceeds from the bond issue to fully redeem the company’s outstanding 2022/2026 (including the July 2024 tap issue) and 2023/2027 bonds (Inderes estimate; 446 MEUR in total) and for general corporate purposes. The existing bonds will be redeemed at a premium (102.344% and 103.625%, respectively), along with accrued but unpaid interest. The redemption date is scheduled for April 10, 2025, with the record date set for April 3, 2025. This refinancing will generate annual interest cost savings of around 12.5 MEUR, according to the company. For 2025, however, we estimate that the impact will be closer to 9.5 MEUR, as the bond redemption will take place at the beginning of Q2’25 (April).

The net effect of these transactions is an increase of approx. 50 MEUR in interest-bearing debt and about the same in cash. Given last year’s subsequent bond issue and the acquisition of Jun Group, we had already factored in lower financial expenses in our forecasts, as the improved financing terms from the bond issue and the improved earnings quality following the acquisition signaled what the company could expect moving forward. However, we note that this refinancing occurred slightly earlier than expected, which due to the timing and the financing terms has a fairly small impact on our current EPS estimates for 2025 (FY25e: ~+5%), but no immediate effects on our estimates for 2026 and beyond. We will incorporate the transactional effects of the bond issue into our estimates in conjunction with the Q1 report at the latest.

New bond issue puts Verve in a more favorable position for deleveraging

While this refinancing was largely expected, we view it positively as it strengthens Verve’s financial position and deleveraging outlook. This bond issue builds on measures already taken in 2024 to improve leverage, including the direct share issue, the subsequent bond issue on better terms, and the acquisition of Jun Group at a compelling price. Although debt levels will temporarily rise in absolute numbers, the more favorable financing terms will make the company’s debt position more manageable, as a smaller portion of generated cash flows will go to servicing interest payments and can instead be used for deleveraging.