Smash repairs company AMA Group is planning to refinance its debt in the coming months, with its offshore lenders expected to be replaced by non-bank providers that typically fund private equity deals.
Ahead of its moves to lock in new loans will be negotiations with Suncorp over insurance pricing for repairs through its Capital Smart business.
AMA purchased Capital Smart in 2019 for $440m off Suncorp, but Suncorp remains a customer. AMA debt is set to expire in October 2024.
So far, it is understood that there has been strong interest in refinancing the debt, and those likely to participate are non-bank lenders that typically fund private equity deals.
AMA is said to have a strong relationship with its existing lenders and are they are satisfied with its outlook, as the company affirmed guidance of annual earnings before interest, tax, depreciation and amortisation of $70m to $90m for 2023.
AMA’s main lender is ANZ, which has syndicated out some of the debt to other banks, predominantly those offshore. Among its lenders are Bendigo Bank and Bank of China, while other top four Australian banks also provide loans.
The amount of debt will be a multiple of the EBITDA, based on the outcome of the Suncorp negotiations.
Suncorp is believed to be keen to get the negotiations finalised to provide certainty around the price of repairs, with a result expected by June for the new contract to start by July 1.
At December, AMA had $182.7m of net debt, up 11 per cent from June. The company said while delivering its results that it planned to assess options for an early refinancing through the second half of the 2023 financial year, including incremental growth funding.
Of its gross debt of $215m, 23.3 per cent consists of convertible bonds, 35.5 per cent is senior unhedged debt and 41.2 per cent is senior hedged debt.
AMA posted a $25.75m loss for the six months to December, but it was down from its $46.3m loss a year ago as strong demand for repairs started to resume after the global pandemic.
It has been hit by labour scarcity, high inflation raising costs, and also suffered some supply chain delays.
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