Case Study
£80M debut private placement for Two Rivers Housing
Summary
A case study of how Chatham advised Two Rivers on its refinancing, including a debut £80M private placement.-
£80M long-term capital markets financing raised
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2.45% coupon on debut deal
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£50M raised through an additional RCF
Background
- Two Rivers Housing is a former-LSVT housing association based in the Forest of Dean, managing over 4,000 homes across Gloucestershire and Herefordshire.
- It has maintained a single banking relationship, and the debt portfolio was largely unchanged since transfer in 2003.
- Two Rivers Housing was seeking additional funding suited to the growth and stock investment ambitions of the organisation.
Our Approach
- Chatham initially conducted a detailed analysis of the debt portfolio, highlighting opportunities for restructure.
- The team modelled a new business plan to reflect the benefits of a restructured debt portfolio and significant capacity to develop new homes.
- Two Rivers Housing embarked on a partial refinancing, including raising a new £50M revolving credit facility (RCF) at tight margins and renegotiating its existing long-term bank loans.
- The refinancing culminated in Two Rivers Housing’s debut private placement transaction, raising £80M including a one-year deferred tranche.
Benefits
- Two Rivers Housing successfully restructured the debt portfolio to suit the future funding requirements of the business.
- It secured £80M from a US institutional investor, enabling the repayment of certain banking facilities, as well as providing certainty of funding for the future development programme.
- The deferred drawdown tranche was priced with no additional premium, helping to manage negative cost of carry.
- At the same time, Two Rivers Housing renegotiated the size, final maturity, and covenant package of its existing banking loans.
- This was achieved while keeping the lending margins static for the first five years, and without realising any mark-to-market (MTM) costs.
Disclaimers
This material has been created by Chatham Financial Europe, Ltd. and is intended for a non-U.S. audience. Chatham Financial Europe, Ltd. is authorised and regulated by the Financial Conduct Authority of the United Kingdom with reference number 197251.
