The Vocus Group Ltd (ASX: VOC) share price is storming higher on Thursday after the release of an announcement.
In morning trade the specialist fibre and network solutions provider's shares are up 5.5% to $3.30.
What did Vocus announce?
Investors have been buying Vocus shares after it announced that it has both refinanced and extended the duration of its existing debt facilities and provided an update on its FY 2020 guidance.
Vocus' new syndicated debt facility (comprising A$1,255 million and NZ$135 million) increases the duration of its debt to provide ongoing financial stability and flexibility.
And while the interest cover and gearing ratios are unchanged, management notes that the Net Leverage Ratio (Net Debt/EBITDA) covenant has been amended to a maximum of 3.25x. It will then reduce to 3x from 30 June 2021.
This mean Vocus is currently operating well within its covenant. At the end of December its Net Leverage Ratio stood at 2.8x and is expected to reduce at the end of FY 2020.
Vocus' CEO and Managing Director, Kevin Russell, believes this refinancing and the reaffirming of its guidance is a testament to the strength of the company.
Mr Russell said: "Refinancing our debt and reaffirming guidance in the current market environment shows the underlying strength of Vocus' business. The new loan facility is a strong platform that gives Vocus financial stability and flexibility as we enter the next phase of the company's growth and business transformation."
Guidance.
In FY 2020 Vocus expects its earnings before interest, tax, depreciation, and amortisation (EBITDA) to be in the range of $359 million to $369 million. This compares to FY 2019's EBITDA of $360.1 million.
While today's guidance is within its previous range, it has been narrowed to the low end. In February the company provided full year EBITDA guidance of $359 million to $379 million.
Management revealed that its core Vocus network services business has been doing the heavy lifting. It is expecting this key segment to deliver EBITDA growth of 10% this year.
