Skip to main content
Log In
Case Study

£80M debut private placement for Two Rivers Housing

Date:
September 23, 2020

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
  • 2.45% coupon on debut deal
  • £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.