The Irish Dairy Board (“IDB”) has secured a new five year syndicated bank facility of €420 million, replacing its existing three year €350 million syndicated bank facility.  This new increased facility was significantly over-subscribed and provides IDB and the Irish dairy industry with significant funds to meet domestic expansion and international growth requirements as both prepare for the removal of milk quotas in 2015.

The refinanced facilities comprise of two distinct parts:

  • · €165 million syndicated loan facility (including €30 million of ancillary facilities) to fund IDB’s own working capital requirements and its international growth strategy.  This facility replaces the existing €160 million facility.
  • · €255 million committed syndicated Reverse Invoice Discounting Facility (“RID Facility”)* to fund the working capital requirements of IDB’s members.  This replaces the existing €190 million RID Facility and steps up from €200 million in 2014 to €255 million by 2016, thereby providing IDB’s members with additional funding when milk quotas are abolished in April 2015.  In addition, a further €50 million is available to IDB’s members post April 2016, if warranted, by way of an uncommitted tranche of funding, which would bring the total RID Facility to €305 million.

The participant Banks remain the same as under the previous facilities: Allied Irish Banks; Bank of America Merrill Lynch; Barclays; HSBC; Rabobank; Ulster Bank.

An IDB spokesperson told AgriLand that the additional monies would be used exclusively to meet the needs of members for additional working capital at specific times of the year.

“Obviously, there will a need for additional finance on the part of our members at times of peak milk output,” the spokesperson continued.

“The new bank facility will help processers meet this need. In so doing it will also free them up to draw down other sources of finance, if required, to fund the development of additional processing capacity.

“The availability of the new draw down facility is a further good news story for the dairy sector as it reflects the banks’ continuing confidence in the industry.”

The RID Facility was first introduced in 2012 and the “step-up” mechanism introduced as part of this refinancing allows the RID Facility to step-up, on a committed basis, from €200 million in 2014 to €235 million in April 2015 and to €255 million in April 2016.  This, coupled with the uncommitted €50 million tranche, allows the RID Facility to become a scalable funding solution for our members’ anticipated increased milk expansion post the abolition of milk quotas in 2015.

Commenting on the refinancing, Donal Buggy, Group Finance Director, IDB said:

“The successful refinancing demonstrates the strong support that exists amongst our participating banks for both the IDB and the Irish dairy industry generally.  This strong support was clearly voiced in recent meetings with all of our banks and is evidenced by our new facilities being significantly over-subscribed.  The new facilities strengthen our capital structure and enhance the operational flexibility of the IDB by extending the maturity profile of our debt for five years to February 2019 on competitive terms.  It also gives us the opportunity to make further acquisitions or other strategic investments on our journey to providing routes to market and superior returns for Irish dairy farmers.  The RID Facility, and its step up mechanism to €255 million, provides a significant additional funding source for our members as they invest in growing their output in the crucial period around the removal of milk quotas.”