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APTT refinances debts, lowers distributions to cut costs

ASIAN Pay Television Trust (APTT) on Monday night announced that it has successfully refinanced its existing onshore borrowing facilities and extended its offshore borrowing facilities.

As part of its focused debt management programme, the trust refinanced its existing NT$29 billion (S$1.3 billion) borrowing facilities with new seven-year facilities of NT$31 billion. It also extended the maturity date of its existing offshore facilities from July 2019 to July 2021.

APTT said that following the successful refinancing, along with an earlier extension of interest rate swaps covering more than 80 per cent of the trust's outstanding onshore borrowing facilities, the interest margin on the facilities will decrease to 1.6 per cent from 2.3 per cent, resulting in total annual interest cost savings of about S$9 million from 2019.

The refinancing will also provide funding certainty and eliminate the need for the trust to make significant principal repayments for the next three years.

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APTT will pay lower distributions to unitholders in order to support the debt management programme, with an expected distribution of 1.2 Singapore cents per unit for 2019 and 2020. The lower distribution will result in annual cash savings of more than S$76 million and also offer potential for future unit buybacks.

The new distribution level will be implemented from Q4 2018, and distributions are anticipated to continue on a quarterly basis at 0.3 Singapore cent per unit per quarter. They may be adjusted after 2020, depending on APTT's performance in the next two years.

APTT's gearing ratio is expected to peak at nearly eight times net debt to Ebitda (earnings before interest, tax, depreciation and amortisation) by Dec 31, 2018, due to a combination of additional borrowing in 2018 to fund capital expenditure, payment of refinancing fees and lower Ebitda for 2018.

"While the board appreciates that the reduction in the distribution from the fourth quarter of 2018 may be more than what unitholders had expected, it is a necessary move to keep APTT on a more sustainable footing," said Brian McKinley, chief executive officer of the trustee manager.

"With the impact of rising debt levels and continued pressures on Ebitda, the gearing ratio needs to be managed in order to mitigate the risk of covenant issues in the future, should challenging operating conditions persist. The board is of the view that decisive actions were necessary to manage our debt levels and to steer APTT forward."