Following its initial public offering on the New York Stock Exchange, Birkenstock Holding plc (“BIRKENSTOCK” or the “Company”, NYSE: BIRK) is moving forward with its deleveraging program and is utilizing the net proceeds from the IPO, together with cash on hand, to repay existing debt. The revered global zeitgeist and purpose brand today announced the early repayment of USD 450 million on its USD Term Loan B and EUR 100 million on its EUR Vendor Loan – both loans were solely issued to finance the acquisition of BIRKENSTOCK by L Catterton in April 2021, while the company is running a profitable and cash-rich business and pursues a very conservative financial policy as evidenced by the evolution of operating cash-flow. As a result of the prepayment, BIRKENSTOCK has reduced its total debt from approx. EUR 1,840 million to approx. EUR 1,314 million.
The aggregate amount of the early loan repayments is significantly higher than envisaged in the IPO prospectus reflecting the Company’s continued excellent operating results. The early loan repayments strengthen the Company’s balance sheet while achieving additional financial flexibility. With a leverage ratio that is in line with industry benchmarks BIRKENSTOCK is well positioned to continue on its strong growth trajectory. Since entering into the new capital structure in April 2021, BIRKENSTOCK has reduced its leverage (Total Net Debt-to-Adjusted EBITDA ratio) from above 6x to below 2.5x through repaying debt and growing EBITDA. BIRKENSTOCK plans to continue its deleveraging process and aims to achieve a leverage ratio of below 2x within the next 18 months. Long-term, the Company expects to achieve a leverage ratio of below 1x.
On November 2, 2023, at the end of the current interest period, BIRKENSTOCK made an early partial repayment of USD 450 million on its USD Term Loan B, resulting in an outstanding balance of USD 331 million. Furthermore, on October 16, 2023, the Company completed an early partial repayment of EUR 100 million on the Vendor Loan, leaving an outstanding balance of approximately EUR 200 million.
The EUR 200 million ABL revolving credit facility remains fully undrawn and therefore available in its entirety to BIRKENSTOCK. The early payments reflect the Company’s strong liquidity position and underscore its strong financial performance, commitment to prudent capital management and ability and ambition to invest into key growth areas by unlocking white-space growth opportunities over the long-term.
Oliver Reichert, Director of Birkenstock Holding plc and Chief Executive Officer of the BIRKENSTOCK Group: “It’s as simple as this: We don’t like to be in debt, and we don’t need to because we run a profitable and cash-rich business. Taking this important step of early repayments emphasizes our commitment to debt reduction as outlined in our IPO prospectus. Additionally, the early repayments will result in incremental interest savings of more than EUR 40 million per year. Our robust operating cash flow allows internal financing of investments, aligning with our dedication to financial resilience and creating enduring shareholder value through disciplined financial planning.”