HKFoods: New 90 MEUR debt brings significant interest savings
Summary
- HKFoods issued 90 MEUR senior secured notes with a floating interest rate of 3-month Euribor plus a 3.6% margin, significantly lower than the previous 7.5% margin, reflecting improved financial health.
- The refinancing is expected to save approximately 3.5 MEUR annually in interest expenses, aligning with prior forecasts despite slightly higher-than-expected bank loan costs.
- The reduction in financial expenses is projected to lower the P/E ratio from 11x in 2026 to 9x in 2027, assuming no significant operational setbacks.
- African swine fever's impact on EBIT is estimated at 1 MEUR for 2026, which has been included in current forecasts.
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Translation: Original published in Finnish on 9/17/2026 at 8:18 am EEST.
On Wednesday, HKFoods published a listing prospectus for its senior secured notes of 90 MEUR, the issuance of which it had announced earlier in September. The notes will mature in September 2030, and their floating interest rate is the 3-month Euribor plus a margin of 3.6%. The margin on the new notes is significantly lower than the 7.5 percent margin on the company’s previous notes, which mature in summer 2027, reflecting its improved financial position following a turnaround in earnings in recent years. We had already factored in the expectation of a significant decline in financing costs into our forecasts, so this news does not require any material changes to them.
Significant but anticipated impact on financial costs
The actual margin of 3.6 percent is slightly lower than our previous estimate (approximately 4 percent). Roughly speaking, a 3.9 percentage point drop in the margin on a 90 MEUR debt means annual savings of approximately 3.5 MEUR in interest expenses for the company. While the interest savings are slightly higher than we anticipated, the company has also taken out bank loans that exceed our expectations, and the associated costs will slightly increase financing expenses relative to our projections. Overall, the savings generated by the refinancing are thus in line with our estimates, and the refined loan terms do not necessitate significant revisions to our net financial expense forecasts for the coming years.
P/E-based valuation becoming increasingly attractive
The decrease in financial expenses naturally improves the outlook for net profit, leading us to anticipate a further decline in the P/E ratio from the 2026 level (11x) to a clearly cheaper level (2027e: 9x). This, of course, requires that the operational outlook not weaken significantly due to factors such as African swine fever. Thus far, the effects of African swine fever have been limited to exports, and the company has estimated the impact on EBIT to be around 1 MEUR in 2026, a figure that has been factored into our current forecasts.