AutoWallis: Starting the implementation of the funds raised within the Funding for Growth Scheme

1024 445 Autowallis

AutoWallis has started a new company for the efficient and transparent handling and implementation of the funds from the bonds issued within the Funding for Growth Scheme of the Hungarian National Bank. AW Csoport Szolgáltató Kft. will use the funds from the HUF 3 billion nominal value bond issued in April for refinancing the loans of AutoWallis subsidiaries, resulting in considerable savings on the interests compared to the cost of the loans to be replaced, and supporting the realization of the group’s strategy. 

AutoWallis has started AW Csoport Szolgáltató Kft for the purpose of efficiently and transparently handling the HUF 3.04 billion raised in the beginning of April within the framework of the Funding for Growth Scheme (FGS) of the Hungarian National Bank (MNB). The company shall provide financial services not subject to authorization, exclusively to the subsidiaries of AutoWallis. FGS, providing a favorable financing option, fits well in the strategic plans of the corporation, as AutoWallis has managed to partially replace its existing, more expensive or less favorable, short-term and floating rate financing resources to 10-year loans with fixed or low interests, resulting in substantial competitive advantage for the corporation. Projected on the bond maturity, this could mean as much as HUF 300 million savings on the interest costs for the group as a whole, calculating with the present interest environment, but if the interest costs of short-term inventory financing increase over the next years, the competitive advantage may be several times over this, bringing extra stability for AutoWallis. AW Csoport Szolgáltató Kft. uses the funding under its management for replacing the existing loans and operating leases of the group’s subsidiaries. The replaced bank loans may mean funding for the group that can be used for realizing its planned acquisitions. 

AutoWallis decided about participating in the favorable financing provided by the Funding for Growth Scheme of the MNB last fall. In September last year, as a prerequisite for joining, the corporation acquired the necessary credit rating, with Scope Ratings’ B+ classification provided upon the request of the MNB. As a next step, AutoWallis organized its private placement bond auction within the framework of the FGS, resulting in an oversubscription. Regarding this, Gábor Székely, the chief investment officer (CIO) of AutoWallis, explained that the institutional investors issued claims for more than the offered amount, for a total of HUF 4.15 billion, so the transaction ended with the subscription of all the bonds of the offered total HUF 3 billion nominal value. The transaction was prepared and organized by OTP Bank, as the corporation’s investment service provider. The 60 bonds of HUF 50 million nominal value each, with a fixed interest rate of 3% and a maturity of 10 years, were purchased for a total of HUF 3.04 billion with an average yield of 2.827 percent. For the bonds, there are no capital repayment obligations for the maturity period, which provides stability to the cash flow planning. The high level of interest related to the bond issuance indicates that the investors have a positive outlook on the corporation’s strategy and its operations so far.