© Reuters. Rheinmetall issues convertible debt to finance purchase of Spain’s Expal
Frankfurt (Germany), Jan 31 (.).- The German armaments and automotive components company Rheinmetall (ETR:) will issue convertible debt to finance a large part of the purchase of Spanish ammunition maker Expal Systems.
Rheinmetall reported on Tuesday that it is going to issue convertible debt for a volume of 1,000 million euros.
In November it closed with MaxamCorp. Holding a purchase contract to acquire all of Expal Systems at a price that the Spanish company values at 1,200 million euros.
The rest of the purchase price will be financed in cash and with bank loans.
Rheinmetall is going to issue two series of non-subordinated, non-convertible convertible debt for a nominal value of 500 million euros each with different maturities only for institutional investors.
Current Rheinmetall shareholders are excluded from subscription rights.
Convertible debt series A, which matures on February 7, 2028, has an annual coupon between 1.625 and 2.125%, and series B, which sells on February 7, 2030, between 2 and 2.50 %.
The convertible debt conversion premium, which can be converted into up to 3.14 million new or existing shares, will be between 40 and 45% for the two series.
The Expal purchase is expected to close before the summer of 2023, although it still needs to be approved by the competition authorities and other regulatory bodies.
With this acquisition Rheinmetall wants to prepare for the increase in demand for ammunition and military equipment after the outbreak of the war in Ukraine because many countries have increased their investment in defense and others also send weapons to that country.
In addition, Expal’s products reinforce Rheinmetall’s offer of artillery ammunition and grenades.
Rheinmetall will maintain the six plants in Spain, -Trubia (Oviedo), Burgos; Navalmoral and El Gordo (Cáceres), Albacete and Murcia-, as well as Texarkana in the US.
Expal Systems, which expects to bill 400 million euros in the year, has production capacities of up to between 700 and 800 million euros per year.
