19th July 2024
Zenith successfully completes an increase to its EFP Securitisation facility of up to £300m
Zenith is pleased to announce that it has completed an increase of up to £300m in its non-bifurcated securitisation facility (“EFP1”), which funds both receivables and residual values, with its existing group of lenders. This increase comprises £150m of additional committed facility and an ability to upsize by another £150m under an accordion, un-committed facility. Including the accordion, the EFP facility size will increase to £1.15bn. The facility has been increased on substantially the same commercial terms with the revolving period end date retained at November 2025.
As part of this agreement, the bifurcated facility (“FFL2”) has been reduced by £50m from £125m to £75m – which reflects its current utilisation levels and lower anticipated usage going forward. FFL funds the lease receivables only, with the residual value of vehicles being funded through separate RV facilities.
The total facility size and headroom across both securitisation facilities3 following the increase, including the £150m accordion, is £1,225m and circa £320m respectively.
Mark Phillips, CFO of Zenith, commented: “I’m pleased that we’ve completed this important milestone in increasing our facilities. This expansion bolsters our strong platform and will enable us to continue to grow our funded fleet.
“This increase has been secured with no impact to our borrowing costs and is in partnership with our existing banking relationships. This is a testament to the strength of the long-term relationships with our funders.”
Zenith has agreed to gradually contribute additional collateral into the EFP facility to assist with counteracting the impact of the recent fall in value of BEV RVs4.
The collateral will comprise:
i) new business sold into the facility each month at the prevailing lower level of RVs;
ii) the mitigation delivered through our ongoing lease extension programme, which is progressing well; and
iii) the remaining balance being funded by cash injection.
This collateral improvement will scale up evenly each month to the end of September 2025, starting with an initial cash injection in August 24 of circa £8m, and we expect that a further £12m of cash injection will be required over the period to September 2025.
The group continues to maintain a high level of liquidity, with over £100m5 at the end of June 2024 made up of a combination of freely available cash and an undrawn revolving credit facility, and will fund the cash component of the additional collateral solely through its available cash resources.
Further information will be provided at Zenith’s Full Year results at the end of July.
[1] Exhibition Finance plc
[2] Forge Funding Ltd
[3] Headroom includes both committed and non-committed amounts
[4] Battery Electric Vehicles’ Residual Values
[5] Liquidity shown is after approximately £15m of bond coupon paid at the end of June 2024