Smiths City reaps 4 percentage points of savings switching to ANZ from F and P Finance

Smiths City Group, the Christchurch-based retailer, has reaped some 400 basis points of savings on its credit facilities by switching to Australia & New Zealand Banking Group from Fisher & Paykel Finance, ending a 30-year relationship.

Smiths City has signed up to a $75 million senior revolving secured facility with ANZ for its wholly owned customer credit subsidiary Smithcorp Finance, it said in a statement.

Based on current interest rates, the ANZ facility will cost about 6 percent, while the F&P Finance arrangement, including all fees and margins, exceeded 10 percent and was forecast to rise to 11 percent next year, it said.

The retailer said it will incur break fees in the current year of $1.4 million from the early termination of the F&P Finance facility and will require it to provide an equity injection of $6 million to its finance unit.

“There will be substantial benefit in future years from lower costs, however, we were disappointed to have to incur in the current year break fees,” said chairman Craig Boyce.

Shares of Smiths City last traded at 58 cents and have declined 3.3 percent this year.