Mango is strengthening its commitment to sustainability after refinancing its debt and, for the first time in the company’s history, linking it to environment, social and good corporate governance (ESG) criteria.
Specifically, the agreement involves achieving 100 percent use of sustainable cotton, recycled polyester and cellulose fibers of controlled origin, as well as reducing CO2 emissions by more than 10 percent, all by 2025. These targets have been validated in a second party opinion drafted by Anthesis Lavola, a sustainability services and solutions provider with clients including Gap, Tesco and The North Face.
With this agreement, Mango said it has extended the repayment calendar of its financial obligations, improved the cost of its debt, doubled the availability of revolving credit lines and introduced sustainability criteria–a key development vector for the fashion industry.
CaixaBank managed the transaction, acting as a coordinating agent, agent bank and sustainability agent, as well as being one of the three bookrunners, alongside BBVA and Banco de Sabadell. The participating banks in the operation were Banco Santander, Erste Bank, Deutsche Bank, Ibercaja and Unicaja.
Mango has agreed with its banking pool to extend the repayment calendar of its main syndicated loan, which has an outstanding balance of 236 million euros ($254.52 million) until 2028 from the previously envisaged 2022 and 2023. The deal signed Tuesday involves the issue of a new syndicated loan for 200 million euros ($215.69 million), of which 150 million euros ($161.77 million) will be subject to straight-line depreciation until 2027. The remainder corresponds to a credit line that may be used until 2023 for investments in the company’s capital expenditures and which, if executed, will be amortized in a single bullet payment in 2028.
In addition, the company has agreed with the banks for the possibility of doubling the availability of credit lines through two revolving credit facilities of 200 million euros ($215.69 million) that would become available if the company deemed this necessary.
“This is an historic transaction for the company,” Margarita Salvans, Mango’s chief financial officer, said. “Not only is it the first time we have linked the cost of the debt to sustainability indicators, but we have also managed to extend the repayment calendar, improve its cost and double our financing capacity.”
Mango has managed to reduce the average cost of the loan by linking its cost to sustainable targets, among other indicators. This way, it has linked the margin to the company goals of using sustainable fibers and reducing CO2 emissions.
Mango, which has a firm commitment towards its financial policy and its aim to reduce its debt, managed to achieve one of the milestones it established in 2015 at the close of the 2021 financial year: to reduce its net debt to zero.
The company said it closed the financial year with its healthiest financial structure in the last decade and with a negative debt of 8 million euros ($8.63 million), after meeting its target and reducing its debt by more than 165 million euros ($177.95 million) compared to 2020. This is the first time that Mango’s balance sheet has presented this situation in over a decade.
Mango has repaid a credit line requested from the Instituto de Crédito Oficial (ICO) at the start of the pandemic. The total sum requested in the spring of 2020 was 240 million euros ($258.83 million), which the company never used, but kept on its balance sheet applying a criterion of prudence. In December, Mango repaid ICO the first half of the credit line and Tuesday repaid the remainder of the facility.
CaixaBank managed the transaction, acting as a coordinating agent, agent bank and sustainability agent, as well as being one of the three bookrunners, alongside BBVA and Banco de Sabadell. The participating banks in the operation were Banco Santander, Erste Bank, Deutsche Bank, Ibercaja and Unicaja. The Broseta firm acted as legal advisor for the operation.
Mango, which is present in more than 110 countries, closed 2020 with sales of 1.84 billion euros ($1.98 billion), of which the online channel represented 42 percent.
The company joins peers in fashion that have also secured sustainability-linked financing deals. Prada and Gildan nabbed sustainability-linked loans while VF and Walmart went the green bond route. Amazon’s using its inaugural $1 billion sustainability bond to finance wind and solar energy projects and electric vehicles. HSBC has gotten into sustainable trade finance as well.
Additional reporting by Jessica Binns.