Victoria updates on bond buy-back programme as debt reduction remains key

Worcestershire-headquartered flooring firm Victoria PLC said reducing its debt (de-leveraging) remained a key target for the company against the backdrop of a challenging macro-economic environment.

Updating on trading for the year to end-March this year, the firm said its programme to buy back €25 million of its senior secured notes (bonds) due in 2026 was underway and it has so far bought €11.1 million at an average discount of 21% against par. The aim is to reduce future interest payments and the amount due when the bonds mature or upon redemption.

READ MORE: Victoria eyeing earnings and cash flow boost as it reports record revenue for fiscal 2023

The company said it remained "willing to consider repurchasing further bonds should they become available" but that liquidity had "dried up" with few holders prepared to sell at "current levels".

In addition, the company wants to buy back up to £25 million of its shares and said it will use some of its non-operating cash flow from selling non-core and surplus properties to do so, while the liquidity for bond repurchases was "constrained".

The sale of non-core and surplus real estate and other assets was progressing with net proceeds of €31 million already received and a further €50 million expected, the company added.

Trading-wise, Victoria said the medium-term macro-economic outlook was generally improving but current and near-term trading conditions remained broadly consistent with its previous updates with wider market demand down around 20%.

The company continues to make headway in "sustainably reducing working capital", it added.
"There has been a lot of noise around Victoria in the last six months," said Geoff Wilding, executive chairman, in a stock market statement.

"To their enormous credit, operational management simply put their heads down and forged ahead with the integration projects designed to maximise the available synergies within the group and optimise cash generation in a challenging macro-environment.

"The pace and rigour of this work has accelerated in the last 90 days, with a larger cost incurred in the current year but a clear impact on future earnings and cash flow.

"We emphasise that we are not expecting some immediate improvement in flooring demand. However, we are confident of the impact on earnings and cashflow of management's actions and are certain demand will inevitability revert to the long-term mean."

AIM-quoted Victoria designs, manufactures and distributes a range of carpet, flooring underlay, ceramic tiles, LVT (luxury vinyl tile) and flooring accessories.

Its operations are in the UK, Spain, Italy, Belgium, the Netherlands, Germany, Turkey, the USA, and Australia and it employs around 7,300 people across more than 30 sites.