Centrus advised Gentoo on £310m debt package spanning new facilities, loan extensions and interest rate management

Transaction overview

Centrus was delighted to have advised Gentoo on the completion of a substantial debt package totaling £310m, bringing together new money, loan extensions and interest rate hedging across four lenders.

Gentoo secured £60m of new 10-year term debt from HSBC and Barclays, with Barclays joining Gentoo’s banking group for the first time. NatWest extended £200m of existing term debt facilities, adding longevity to a significant portion of the balance sheet. HSBC also extended a further £50m revolving credit facility, strengthening Gentoo’s liquidity position. Alongside the debt, Centrus structured a suite of loan-linked and unsecured ISDAs with ABN AMRO, NatWest and HSBC to manage interest rate risk across the portfolio.

What value did Centrus add?

The breadth of this transaction – spanning new term debt, loan extensions and hedging across four lenders simultaneously – required careful coordination and execution. Centrus managed the full process, including:

• Introducing Barclays as a new lender, broadening Gentoo’s banking group, and securing highly competitive margins on new term loans
• Negotiating the extension of NatWest’s £200m facilities and HSBC’s £50m RCF
• Securing improved terms on existing facilities including reduced margins and improved covenant levels, reducing cost of debt and providing greater headroom across the portfolio
• Structuring and executing a suite of loan-linked and unsecured ISDAs with three counterparties, and novating existing hedging with no additional fees

How did this transaction benefit Gentoo?

Gentoo’s ten-year corporate strategy set out an ambitious vision: to become the best provider of social homes in the country, investing £600m in existing homes, building more new social homes across Sunderland and the North-East than ever before, and helping communities to thrive.

Delivering that required a strong, diversified funding base. This transaction gave Gentoo exactly that – competitive new facilities from a broad group of lenders, improved covenant terms, and an interest rate hedging framework that could be used to protect the business as it executed its strategy.

“This was a significant re-financing project for us, bringing together new opportunities, facility extensions and introducing a comprehensive approach to interest rate risk management. Working in close partnership with Centrus made a real difference in delivering such a strong outcome. This project supports the next phase of our corporate strategy to provide the best possible service for our customers to help us toward our vision to become the best social housing provider in the country.”

Paul Wright, Executive Director of Finance – Gentoo

“This was an enjoyable transaction covering a lot of ground – new money, loan extensions, improved terms and getting the right hedging products to manage risk in a volatile rates environment. Gentoo approached it with real clarity on what they wanted to achieve, which made for a great outcome across the board.”

Tom Archer, Director – Centrus

We were delighted to have worked in partnership with Gentoo and Centrus to provide legal advice on all facets of the transaction. We deployed the substantial resources available to us, across multiple practice areas, to ensure we could meet the tight timelines imposed to optimise market conditions for Gentoo.

Gary Grigor, Partner – Devonshires

For more information, please get in touch with Tom Archer, Director of Housing, Education & Care.

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