This retail giant has raised funds….
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The Woolworths Group Ltd (ASX: WOW) share price is trading lower with the market on Wednesday.
In morning trade, the conglomerate’s shares are down 0.5% to $38.13.
Not even the announcement of the pricing of $700 million of bonds has been able to keep the Woolworths share price in positive territory.
What did Woolworths announce?
This morning Woolworths announced that it has successfully priced $350 million of senior unsecured six year notes and $350 million of ten year notes. These were launched as part of its medium term note programme.
The company is raising these funds in order to support its growth and are linked to sustainability goals. Management notes that this reflects the company’s commitment to reducing carbon emissions.
In fact, the Sustainability Linked Bonds (SLB) structure embeds a penalty (via a margin increase) into the terms of the notes. These would apply if, at the end of FY 2025 and FY 2029 (for the six year and ten year notes respectively) the company’s scope 1 and 2 emissions are not aligned with the forecast trajectory to meet Woolworths’ 2030 carbon emissions reduction target.
The release explains that the notes were priced at 1.85% for the six year notes and 2.75% for the 10 year notes. Settlement is expected to occur on 6 October 2021.
Woolworths intends to use the proceeds from the notes for general corporate purposes. This includes establishing long term funding of its recent investments in Quantium and PFD Food Services.
Woolworths’ Chief Financial Officer, Stephen Harrison, said: “Following the strong level of demand for our Euro sustainability linked bond transaction, we are pleased to have provided the Australian debt capital markets with a similar domestic offering. There was strong interest in the market reflecting the growing importance of sustainability in the debt capital markets.”
The Woolworths share price is up over 12% in 2021.
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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.