Hugo Boss says the interest terms of the EUR600m (US$679.8m) loan are linked to the fulfilment of clearly defined sustainability criteria.
The syndicated loan was significantly oversubscribed and aims to provide the company with additional financial flexibility for the successful implementation of its ‘Claim 5’ growth strategy, it adds.
The group outlined Claim 5 in August, with the strategy designed to to accelerate growth across all Hugo Boss brands, touchpoints, and regions.
It targets the company’s vision and aspiration to be the world’s leading technology-driven fashion platform, and one of the world’s 100 leading brands, and is based on five pillars: Boost Brands, Product is King, Lead in Digital, Rebalance Omnichannel and Organise for Growth. There is also a clear commitment to sustainability.
The syndicated loan is classified as sustainable finance and therefore fulfills important environment, social, and governance (ESG) criteria, Hugo Boss says.
The interest rate is adjusted annually in accordance with the achievement of target values defined by Hugo Boss for four ESG indicators: The reduction of CO2 emissions, the proportion of women in management positions, fair working conditions at suppliers, and the use of more sustainable cotton.
The loan has a term of three years and includes two options to extend the term by one year each and one option to increase the loan volume by up to EUR300m. This will replace the previous syndicated loan from Hugo Boss for EUR633m.
The credit consortium includes nine international banks. The transaction was coordinated jointly by Commerzbank, BNP Paribas, and LBBW as book runner.
“The successful transaction reflects the great confidence our lenders have in our growth strategy,” says CFO Yves Müller. “The credit commitment gives us additional financial leeway to implement ‘Claim 5’ consistently and successfully in the coming years. At the same time, I am extremely pleased that the terms of the loan are for the first time linked to our performance and progress in the so important area of sustainability. ”
A number of brands have made similar moves in recent months, with the John Lewis Partnership having signed a GBP420m (US$573.6m) five-year revolving credit facility linked to environmental targets last month.
British lifestyle brand Joules also extended and converted its current credit facility with Barclays Bank to an ESG-linked financing arrangement in May.
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