Redcape Hotel Group (ASX:RDC) has announced that it has secured a $503 million debt facility across the big four banks.

The new arrangement will replace the current debt facility which is due to expire in September 2020. National Australia Bank (NAB) will contribute to the new debt facility for the first time. Redcape CEO Dan Brady welcomes the addition to the new agreement.

“Redcape has successfully secured an expanded lender group introducing National Australia Bank Limited to its lender pool alongside existing financiers Australian and New Zealand Banking Group Limited, Commonwealth Bank of Australia and Westpac Banking Corporation.”

“In addition to introducing a new bank into the lender group, the establishment of a commons terms deed incorporating more favourable terms provides Redcape with greater flexibility to support its growth ambitions which is an important strategic objective for the Group.”

The debt refinancing is a welcome sign for the pub industry, who have faced tough lending conditions in recent years. The involvement of all four of the major banks suggests a renewed confidence in the value and profitability of pub businesses and their assets.

Redcape’s new debt facility is split into two tranches ($250 million and $253 million), which will expire in September 2022 and September 2024 respectively. The new structure extends the hotel group’s average debt tenure to four years. It is expected to strengthen Redcape’s balance sheet and minimise future interest costs.

The announcement comes off the back of Redcape’s most recent purchase within the existing debt facility of the Pig N Whistle in Redbank Plains, Queensland. The group’s portfolio currently includes 33 hotels in New South Wales and Queensland.

Vanessa Cavasinni

Vanessa Cavasinni is the managing editor of Australian Hotelier and Club Management, trade publications for the pub and club sectors respectively. Vanessa has been at the helm of Australian Hotelier since...

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