In a strategic move following its recent Wall Street debut, Birkenstock Holding plc is aggressively tackling its debt load, utilizing the liquidity from the net proceeds of its successful initial public offering (IPO) to settle existing financial obligations.
As of November 2, concluding the latest interest period, the renowned German footwear brand executed a substantial partial prepayment of $450 million (€419 million) towards its Term Loan B. Post this repayment, Birkenstock’s term loan utilization stands at approximately $331 million, roughly €308 million.
On October 16, Birkenstock initiated a noteworthy partial early repayment of €100 million for its Vendor Loan, bringing the total to around €200 million. Notably, the entire €200 million ABL revolving credit facility remains untapped, offering full accessibility to Birkenstock.
Both loans were originally secured to facilitate L Catterton’s acquisition of Birkenstock in April 2021. This aggressive early repayment initiative has substantially reduced Birkenstock’s total debt from approximately €1.840 billion to roughly €1.314 billion.
Oliver Reichert, Head of Birkenstock Holding plc and CEO of Birkenstock Group, emphasized the company’s aversion to unnecessary debts, stating, «It’s very simple: we don’t like having debts and we don’t need them because we run a profitable business with significant liquidity. Early repayment is an important step that shows we are meeting our debt reduction commitment as outlined in the IPO prospectus.»
The actual early credit repayments exceeded the figures outlined in the IPO prospectus, significantly bolstering the company’s financial position and enhancing its fiscal flexibility.
Since the shift in Birkenstock’s shareholding structure in April 2021, the group has markedly reduced its debt ratio from 6 times EBITDA to less than 2.5 times. Looking ahead, Birkenstock aims to achieve a debt ratio of less than twice EBITDA within the next 18 months, ultimately reaching a target ratio of 1 in the long run.
Reichert highlighted the positive financial impact of early repayments, stating, «Early repayments are generating extra interest savings of more than €40 million per year. Our robust operational cash flow enables us to finance investments internally. This is in line with our commitment to financial stability and sustainable value creation for our shareholders through our stringent financial planning.»
