Victoria Plc - comment

Victoria Plc has launched a consent solicitation to amend and extend its 2026 Notes. With approximately 90% of these bondholders already party to the agreement, the move comes as no surprise. Additionally, 90% of the 2026 Noteholders and at least 50% of the 2028 Noteholders have entered into a binding Transaction Support Agreement, which is expected to facilitate the transaction's execution.

Under the proposed terms, 2026 Noteholders are offered the opportunity to secure their position, although the security will rank junior to the new super senior facility. The maturity of the 2026 Notes will be extended to 2029, featuring a springing maturity ahead of the 2028 Notes. The coupon will be revised downward from 3.675% to 1% cash and 8.875% PIK. While the notes will be secured, they will remain subordinate to the super senior facility.

The process requires 90% consent, which the company is expected to obtain. For those who do not consent, the alternative terms involve extending the maturity to August 2031 with a reduced 1% cash coupon and no PIK element. Notably, no consent is required from 2028 Noteholders. Participating 2026 Noteholders will receive a 1% consent fee.

Victoria has also reported weaker-than-expected financial results. EBITDA (pre-IFRS 16) declined to £81 million, with margins compressing to 7.3%, largely driven by a 9% year-on-year volume decline versus already weak FY24 comparables. A call is scheduled for 1:00 p.m. tomorrow. The numbers do not compare well against Howden Joinery numbers this morning either. Howden is exposed to similar markets, 90% residential and 95% Repair, Maintenance and Improvement, and has experienced a 2% revenue growth in H1, coupled with margin expansion due to price increases at the beginning of the year. 

Our initial assessment is that while this transaction offers a short-term improvement in liquidity and eases the interest burden, leverage remains elevated at approximately 9.0x (including factoring). A more comprehensive restructuring is likely to be necessary by late 2027.