Eureka Group Secures $185M Debt Facility to Fuel National Growth
Eureka Group Holdings has upsized its debt facilities to $185 million with improved terms, enhancing its financial flexibility to expand residential developments across Australia.
- Refinanced and upsized debt facility to $185 million from $101 million
- Facility split across 3-, 5-, and 7-year terms with competitive interest rates
- New $200 million uncommitted accordion facility for future debt capacity
- Supported by National Australia Bank and Westpac as lending partners
- Financial covenants include max LVR of 55% and ICR above 2.0 times
Eureka’s Strategic Refinancing
Eureka Group Holdings Limited (ASX: EGH) has successfully refinanced and upsized its debt facilities, increasing its borrowing capacity from $101 million to a substantial $185 million. This move, backed by longstanding banking partners National Australia Bank and Westpac Banking Corporation, marks a significant step in the company’s financial strategy to support its growth ambitions in the residential property development sector.
The new facility is structured across multiple maturities, 3, 5, and 7 years, offering Eureka a balanced approach to debt management and repayment flexibility. Alongside this, an annually renewable $5 million working capital facility has been established to support operational liquidity needs.
Improved Terms Reflect Business Stability
One of the standout features of this refinancing is the material improvement in pricing and interest rate terms. These competitive rates reflect the increased scale and stable cash flows of Eureka’s business, underscoring lender confidence in the company’s financial health and growth prospects.
Financial covenants attached to the facility include a maximum loan-to-value ratio (LVR) of 55% and an interest coverage ratio (ICR) greater than 2.0 times, indicating prudent risk management and a solid buffer to meet debt obligations.
Future Growth Enabled by Accordion Facility
Beyond the immediate upsized facility, Eureka has secured an uncommitted $200 million ‘accordion’ facility, which can be drawn upon to increase debt capacity as needed. This feature provides the company with significant optionality to fund acquisitions, expand existing projects, or enter new capital partnerships without delay.
CEO Simon Owen highlighted the strategic value of this refinancing, stating that the enhanced financial capacity and the introduction of a second lender position Eureka well to pursue the next phase of growth. The company aims to develop and acquire residential communities nationally, leveraging both balance sheet strength and external capital partnerships.
Advisory and Market Implications
Professional advisory firms PwC Debt & Capital Advisory and Dentons played key roles in structuring the transaction, while King & Wood Mallesons represented the lenders. Their involvement signals the complexity and significance of the deal within the real estate financing landscape.
For investors and market watchers, this refinancing not only improves Eureka’s cost of capital but also signals confidence from major banks in the company’s strategic direction. It sets a foundation for accelerated growth, though the precise deployment of the new funds remains to be detailed in forthcoming announcements.
Bottom Line?
Eureka’s enhanced debt facility lays the groundwork for ambitious expansion, but eyes remain on how swiftly it translates into tangible development activity.
Questions in the middle?
- How will Eureka prioritise deployment of the new and accordion debt facilities?
- What specific residential projects or acquisitions are targeted next?
- How will the improved financing terms impact Eureka’s profitability and cash flow in the near term?
