Europe High-Yield Bond: Evri’s £725m seven-year bond
Delivering a difficult story A strong roadshow and an attractive underlying business outweighed any concerns investors may have had about Evri’s quality of service or potential reforms to UK employment practices in the parcel delivery company’s LBO-related trade in September.
Evri not only brought a much sought-after new money transaction to the market, but also printed the largest high-yield sterling bond deal supporting an LBO in 2024.
The company launched an intended £500m seven-year non-call three senior secured note issuance which, alongside a seven-year euro-denominated term loan B, brought the total offering to an equivalent of £1.4bn. Proceeds were to partially fund Apollo Global Management’s acquisition of Evri and refinance debt. Apollo also contributed £985m of equity to fund the buyout.
But Evri faced multiple challenges, including its not-always-positive reputation with consumers. The company was ranked at the bottom (alongside Yodel) in terms of customer satisfaction for contacting parcel firms for help in an October Ofcom report, for instance, while complaints against it were easy to spot online.
In addition, the company’s model of using self-employed couriers (which helps it to be cost efficient) is facing challenges from the UK Labour government, which is proposing to strengthen workers’ rights and protections.
However, investors were won over by the issuer’s marketing during the roadshow and, more importantly, its lucrative underlying business.
So much so that Evri (B2/B+) upsized the bond to £725m while it cut the euro term loan B to £675m-equivalent from £900m-equivalent.
“We got comfortable with the underlying business, despite the noise … the amount of parcel delivery numbers is incredibly high,” said Stanford Hartman, EMEA head of high-yield and leveraged finance and loan syndicate at BNP Paribas.
“People got comfortable with the volume of products, the margins, and, in the downside case in our model, you still have cashflow generation of the business,” he said.
With the strong demand, Evri tightened pricing on the bond to 8.125% from initial price thoughts of 8.50% area, plus or minus 12.5bp, while its term loan B came at Euribor plus 425bp with a 0% floor, unchanged from guidance. The OID landed at 99.5, the tighter end of 99–99.5 guidance.
The mix of loans and bonds allowed the company to optimise the structure of the deal, using the better traction gained on the bond to flex pricing and upsize it.
BNP Paribas and HSBC (B&D) were global coordinators and joint physical bookrunners, while Barclays and UBS were joint global coordinators.
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