easyJet has signed a new undrawn $1.75bn five-year sustainability-linked term loan, which has been underwritten by a syndicate of banks and supported by a partial guarantee from UK Export Finance under its Export Development Guarantee (EDG) scheme. The Export Development Guarantee scheme for commercial loans is available to qualifying UK companies and does not carry preferential rates or require state aid approval.
The new term loan facility replaces easyJet’s existing $1.77bn term loan facility. easyJet states that it is “capitalising on its sector-leading investment grade balance sheet to fully repay the existing UKEF drawn balance of $950 million, which incurred interest at a floating rate”. That facility has now been cancelled, resulting in no aircraft currently being encumbered within the airline group, confirmed easyJet.
The new five-year sustainability-linked facility will be undrawn initially. Upon any draw down, cash will be secured against aircraft.
The new facility extends easyJet's debt maturity profile, whilst maintaining available liquidity and reduces the group net financing costs.
A sustainability key performance indicator linked to a reduction in carbon emission intensity in line with easyJet’s SBTi validated target is embedded in the financing cost – there is a margin adjustment mechanism (upward or downward) conditional to the achievement of specific milestones.
“This new facility extends easyJet's maturity profile, whilst maintaining our high liquidity position,” says Kenton Jarvis, easyJet CFO. “The group’s net financing costs will significantly reduce over the coming years with over one billion pounds of debt retired this financial year.”
Jarvis added: “This facility strengthens our balance sheet, supports our investment grade credit ratings and further shows our commitment to our SBTi-aligned sustainability targets.”