Centrus arranges a €70m private placement and £100m of new bank facilities for Alliance Trust PLC

Transaction Overview

Established in 1888, Alliance Trust PLC (ATST) is one of the oldest and largest investment trusts in the UK, offering a diversified but highly active global equity portfolio at a competitive cost.

Committed to providing shareholders with the potential for long-term capital growth, the trust has demonstrated resilience by adapting to evolving market conditions over the years. Employing a diversified investment approach, Alliance Trust PLC seeks opportunities across various sectors and asset classes, aiming to optimize returns for its investors. 

In Q2 2023, Centrus was engaged to undertake a review of ATST’s capital structure and sources of debt finance. 

Centrus Solution

In the light of the review and recommendations made by Centrus, ATST’s board decided to: 

• Raise an additional £60m (equivalent) from the institutional debt market in order to provide the company with an element of medium term structural debt as part of its investment strategy.
• Reduce its bank facilities from £250m to £100m. 

The proceeds of the institutional debt were used to repay outstanding floating-rate bank borrowings, maintaining the Company’s drawn borrowings broadly unchanged.

By using the proceeds of the €70m private placement to repay existing bank debt, ATST’s weighted average borrowing cost was reduced from 4.7% pa to 3.8% pa, and the overall Weighted Average Life (WAL) of the debt portfolio has increased.

Outcome

Alliance Trust has a well diversified portfolio of assets with exposure to a wide range of markets, sectors and currencies. For a variety of reasons ATST’s board decided to borrow in EUR thereby accessing a lower coupon currency while hedging a modest element of its EUR asset exposure.

Alliance Trust has issued two tranches of privately placed Notes:

• €20m maturing in December 2030 with a fixed coupon of 4.02%.
• €50m maturing in December 2033 with a fixed coupon of 4.18%.

Centrus acted as the arranger of the Notes, advising on sizing, structuring the transaction, drafting an investor presentation, and arranging meetings with a selected group of institutional investors. 

Separately, Centrus arranged new facilities with different maturities from two banks aggregating £100m. 

“Having reviewed its capital structure and the composition of its debt facilities, ATST’s board decided to term out a portion of its bank debt, reduce the amount of its bank facilities to £100m and split these between two banks. Given the strength of Alliance Trust’s balance sheet and the high credit quality of the company, it was unsurprising that the institutional financing attracted significant demand from a range of investors. Ultimately one investor was chosen which offered the most attractive combination of maturity and coupon enabling Alliance Trust to lock in an element of strategic debt at levels which should be of long term benefit for the company and its shareholders”

Robert St John, Centrus

Back to Credentials

• 
• 
•