Mango has refinanced its debt by pushing it further into the future and at lower costs, and by linking it to environmental, social and governmental criteria.
The Barcelona-based fashion retailer with a contemporary flair and global distribution also doubled the availability of revolving credit lines and introduced sustainability criteria.
In its announcement Tuesday, Mango indicated that it had reached an agreement with its banks to extend until 2028 the repayment calendar of its main syndicated loan, which has an outstanding balance of 236 million euros. Repayment had been due this year and in 2023.
The refinancing also involves the issue of a new syndicated loan for 200 million euros, of which 150 million euros will be subject to straight-line depreciation until 2027. The remaining 50 million euros correspond to a credit line that may be used until 2023 for capital expenditures and which, if executed, will be amortized in a single “bullet” payment, or lump sum, in 2028.
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In addition, the company has agreed with the banks on the possibility of doubling the availability of revolving credit lines through facilities for the total sum of 200 million euros, which would become available if the company deemed it necessary.
“This is a historic transaction for the company,” said Margarita Salvans, Mango’s chief financial officer. “Not only is it the first time we have linked the cost of the debt to sustainability indicators, but we have also managed to extend the repayment calendar, improve its cost and double our financing capacity.”
Mango has managed to reduce the average cost of the loan by linking it to using sustainable fibers and reducing Scope 1 and Scope 2 CO2 emissions.
Specifically, the agreement involves achieving by 2025 a 100 percent use of sustainable cotton, recycled polyester and cellulose fibers of controlled origin, as well as reducing CO2 emissions (scope 1 and 2) by more than 10 percent. These targets have been validated in a Second Party Opinion drafted by Anthesis Lavola, a sustainability consultancy in Spain.
Mango indicated that CaixaBank managed the refinancing transaction, acting as a coordinating agent, agent bank and sustainability agent, as well as being one of the three book runners, or underwriters, alongside BBVA and Banco de Sabadell. The participating banks in the operation were Banco Santander, Erste Bank, Deutsche Bank, Ibercaja and Unicaja. The firm Broseta acted as legal adviser for the operation.
As well as refinancing its debt, Mango repaid the 240 million euro credit line obtained from Instituto de Crédito Oficial, or ICO, at the start of the pandemic in the spring of 2020. Mango never tapped into the credit line, but kept it on its balance sheet to be financially prudent during the health crisis. Mango repaid ICO the first 120 million euros of the credit line in December and on Tuesday repaid the remaining 120 million euros.
As reported by WWD in March, Mango ended 2021 in its best financial state in a decade, with a net profit of 67 million euros for 2021, after losing money in pandemic-riddled 2020.
Last year’s net was more than three times higher than the 2019 net of 21 million euros.
Volume reached 2.23 billion euros, a 21.3 percent increase over the 1.84 billion euros generated in 2020, and close to 2019’s turnover of 2.37 billion euros.
Online sales last year grew 23 percent to 942 million euros, or 42 percent of the total volume.
Although stores were closed an average of 48 days last year due to the pandemic, the brick-and-mortar sales improved by 21.4 percent compared to 2020.
As of the end of last year, Mango had 2,447 stores worldwide. Last year, there were 226 net store openings, including flagships in London, Düsseldorf and Berlin, and four U.S. openings. The company has temporarily ceased operations in Russia due to that country’s invasion of Ukraine.
Mango is scheduled to open a flagship at 711 Fifth Avenue on the site of Ralph Lauren’s former Polo store, in May. The flagship will encompass 22,600 square feet over three levels and will display women’s, men’s and kids’ lines.
Mango was founded in Barcelona 1984 and has a presence in more than 110 countries.