Li & Fung said this is an important step aimed at deleveraging the company’s balance sheet

Li & Fung said this is an important step aimed at deleveraging the company’s balance sheet

Sourcing giant Li & Fung Limited has completed a simultaneous bond tender offer and new bond offering in a move aimed at solidifying its capital structure, allowing it to accelerate its transformation.

The new issuance is for a US$400m five-year medium-term notes at a 4.375% interest rate. The bond tender offer resulted in a buyback of $375.8m, representing 50.1%, of its outstanding $750m bond that is maturing in May 2020.

The supply chain solutions provider says this is an important step aimed at deleveraging the company's balance sheet and providing higher financial flexibility for its upcoming three-year Plan (2020-2022).

"We have made significant progress in our current three-year plan and are winning market share and new customers due to our operational excellence, global diversified network and 3D virtual design services," says Spencer Fung, group CEO of Li & Fung. "Our capital structure gives us a solid foundation for our new three-year plan. It allows us to seize market opportunities amid global trade disputes and to accelerate our transformation as we create the Supply Chain of the Future for the benefit of our customers and our industry."

Ed Lam, CFO of Li & Fung, adds: "Coupled with our solid capital structure, the bond tender and offering allow us to actively extend maturity in financing our debt and manage our balance sheet. Together with Temasek's $300m investment in our logistics business in June this year, we are in a very strong cash position with low gearing ratio and sound financial footing."

Li & Fung sold a 21.7% stake in its logistics business to Singapore-headquartered investment company Temasek, and postponed plans for a proposed spin-off IPO of the segment.

In August, the company reported a first-half profit of $21m from a loss of $86m a year earlier. However, on a like-for-like basis, turnover was down 8.4% to $5.36bn, mainly due to ongoing destocking, customer turnover and customer bankruptcies as brands and retailers continued to face pressure on sales and margins.