Online retailer THG has announced a debt refinancing package and equity fundraise – with CEO and founder Matt Moulding committing up to £60m of his own money.
The planned refinancing package will reduce the overall debt and extend the term to 2029 as the Manchester-headquartered firm looks to expand its consumer markets.
The move follows the demerger of THG Ingenuity from the profitable THG Beauty and THG Nutrition and the company’s return to the FTSE 250 Index.
Moulding has agreed to contribute up to £60m to the equity fundraise, which follows the £50m he’s already invested in THG shares since its IPO.
THG’s existing £760m banking facilities weren’t due to expire until the end of 2026 but the move provides additional certainty.
One analyst claimed: “It’s one of the biggest founder subscriptions on the stock market in UK history.”
Writing on LinkedIn, Moulding said running a business was as stressful as having children and compared his actions to taking care of his ‘corporate offspring’.
He said: “Nobody warns you about the crushing burden of responsibility when setting up a business. It’s a lot like parenting. People say it’s magical, and from the outside it looks simple enough.
“But, in a blink, four kids had arrived before I realised I’d signed up to a lifetime of stress – each additional child exponentially increasing the worry.
“Starting a business follows the same path. Before you know it, you’re in above your head with growing numbers of staff and stakeholders.
“Like parenting, founders/CEO feel the burden of nurturing their corporate offspring, bringing solutions to challenges.
“We all know the world is a volatile place right now – Trump has brought shock and awe to world order and financial markets alike.
Matt Moulding and friends on a weekend skiing trip (Copyright Matt Moulding)
“The resulting instability means very few deals are getting done in corporate land. People are naturally sitting on their hands to see how things play out.
“But not even Trump knows if stability will return this time next year. Every action has a reaction, and Trump likes action. And so THG has decided to crack on anyway.
“This afternoon, we announced plans to refinance the group’s existing £760m banking facilities, which don’t expire until the end of 2026.
“Over the past few weeks we’ve worked with the debt markets to understand what a deal would need to look like to refinance our facilities early, on similar terms to our existing deal.
“Given THG Ingenuity is no longer part of THG, we’re planning a new £550m set of facilities, reflecting THG no longer funding Ingenuity’s capex investments.
“Achieving a similar interest rate as the pre-Covid ‘free money era’ isn’t quite as simple.
“However, the feedback from debt markets has been that this should be achieved if THG raises £60m of equity.
“And so, like any parent, I’m once again stepping up for THG. This time investing a further £60m into THG, underpinning the planned refinancing.
“Joining the LSE four-and-a-half ago hasn’t proved too profitable for me or my family. I will soon have bought £110m of THG shares in less than five years.”
No salary for 5 years
The 53-year-old entrepreneur spent the weekend skiing with friends and revealed he’s waived around £15m in salary and expenses payments since the 2020 IPO – but has drunk as much coffee as he wants!
“Despite the CEO role normally attracting remuneration of c£3m a year, since IPO I’ve waived all remuneration and expenses, effectively paying to go to work each day,” he wrote. “I do get free coffee though.
“(My wife) Jodie and the kids are vocal in saying I’m an idiot for not taking the £15m in remuneration these past five years – they’re probably right. But everyone has their own take on parenting.
“In respect of THG, this is mine. Each decision, from investing £110m in THG shares, buying control of Ingenuity at the end of 2024, and waiving £15m remuneration since IPO, has been my best take on parenting my corporate offspring.
“I’m not aware of anyone ever listing on the LSE and taking a similar path. Smart folk. I mean, why would they? Hopefully time will prove it’s been a path worth taking.”
Under current authorisations, THG can issue up to c.91.86m shares for cash (equivalent to c£31.2m at current market price).
Moulding has agreed to subscribe for up to £31.2m in the equity placing and other stakeholders may also get involved.
His investments will be made personally or via FIC Shareco Limited.
The proposed refinancing comprises:
- Partial amend & extend of the existing EUR term loan B to extend the maturity of €475m to December 2029;
- Repayment of the £109m existing GBP term loan A and the remaining €125m of the TLB through a combination of cash on balance sheet and a new equity contribution of at least £60m and up to a maximum of £91.2m; and
- Extending the maturity of the existing £150m revolving credit facility to May 2029.
As a result of the proposed refinancing, net total leverage (excl. leases) would decrease from 3.2x to 2.6x based on continuing adjusted EBITDA (excluding Ingenuity) of £92m in 2024, on a fundamentally more cash generative business.