One of the outcomes of the new banking facility arrangement will be to repay the entire debt on the iconic building potentially as early as 2021.
The new financial structure has been agreed through negotiation with Barclays Corporate.
Barclays Corporate has recognised the strategic planning of the WRU based on its current and future performance projections.
The impact of this move has been to reduce the current level of the term loan from £32million to a record low of £25million.
The loan was originally more than £60million and was taken out by the WRU to help fund the building and development of the Millennium Stadium and the new arrangement confirms the bank’s confidence in the ability of the WRU to firmly manage its business.
A key factor in the new bank arrangement is the increased “revolving” facility from £10million to £15million which allows the WRU to pay off significant sums when it is generating high income and then have the freedom to call upon increased support if required.
This is an important measure for the Group given the seasonal nature of its activity which leads to some periods of high income.
An immediate impact of the new arrangement will be to reduce the repayments on the current loan by several hundreds of thousands of pounds every year.
Under the new arrangement the WRU Group has immediately paid £5million to restructure an interest rate hedge which has the effect of reducing the cost of funds.
Although the payment of the £5million will impact the annual results of the Group which will be announced in the autumn the new facility can now be managed more flexibly in future.
The Group Chief Executive of the WRU, Roger Lewis, said: “This is a clear signal that we have now achieved a proper level of corporate confidence in the sound financial base of the Group.
“Internally we trust in our ability to deliver on promises and Barclays Corporate clearly share that confidence.
“We work extremely hard to maximise our income and it is now right and proper for us to extend that ability into a renewed and rigorous formula to manage and control our debt.
“We work to a clear, rolling five-year Financial Strategic Plan for the operation of the Group and the management of our debt is a high priority within that.
“We will presently be announcing another record turnover to the Annual General Meeting of the WRU.
“Moreover we are reinvesting into the game from the elite to the grass roots at record levels.
“We want to leave a legacy of financial sustainability for Welsh rugby and the stadium for generations to come.
“We could have taken an easy option and left things the same, but just like anyone who wants to reduce their home loan we have had to spend a significant amount of cash to rework the debt facility. But in the longer term it will free up our ability to manage the debt, help us fast track its repayment.
“The general economic climate is very challenging at the moment so we are fully aware of the focus, commitment and hard work which will be needed to maintain our momentum within our current financial plans.
“I am very grateful to Barclays Corporate for their support, the Boards of the WRU Group and the Millennium Stadium for their support and in particular to the work of our Group Finance Director, Steve Phillips, for his vision and commitment to achieving this new facility.”
WRU Group Finance Director, Steve Phillips, added: “We are continually reviewing our approach to some of the financial challenges that we face and our discussions with Barclays Corporate have been extremely productive leading up to the completion of the re-financing.
“The new arrangement basically means they are extending the level of trust afforded to us when we last re-financed in 2008 which allows us to properly manage our business.
“As a result of the re-financing, together with the termination of the previous derivative instruments, we now have a very clear strategy in addressing our debt as a set out in our financial planning which, provided we adhere to our financial (targets), will allow us to reduce our debt to more manageable levels in a shorter timeframe than ever previously anticipated.
“In effect, Barclays Corporate is giving us an even greater degree of freedom in how we manage our business, which allows us to focus on the repayment profile of this substantial loan.
“I am delighted that Barclays Corporate has afforded us this opportunity and would wish to thank them for their efforts over the last few months.”
John Union, Head of Wales Region, Barclays Corporate, said: “Barclays Corporate has a long standing relationship with the Welsh Rugby Union and understands the special nature and importance of the Millennium Stadium and Welsh rugby to Wales.
“We remain supportive of Roger (Lewis) and his team and have been prepared to assist the WRU by meeting their funding requirements.
“We look forward to continuing our relationship with the WRU, supporting the business as it continues to evolve.”
