Centrus facilitates partnership between Abri and Octavia, increasing capacity by £200m p.a. and enhancing financial resilience

Transaction overview

Centrus advised Abri Group and Octavia Housing on the formation of their new partnership to become a 55,000 home organisation, increasing capacity by £200m p.a. and enhancing financial resilience. The engagement was delivered in a cost-effective manner, with focused lender negotiations protecting >95% of the value in existing bank facilities and forward consent achieved for Octavia Housing to fully combine with Abri Group in the future.

Why does this transaction/engagement make a difference?

• Delivered partnership in a cost-effective manner; focussed negotiations with lenders protected >95% of the value in existing bank facilities.
• Target financial covenant levels and definitions harmonisation achieved, resulting in substantial increase in capacity and financial resilience by £200m p.a. on average over the next decade, providing Abri with a stronger platform to build new homes and invest in existing ones.
• Greater corporate freedoms around financial support and merger consents were negotiated, including forward consent for Octavia Housing to fully combine with Abri Group in future.
• Arranged £175m of new RCFs with existing bank lenders at attractive pricing and suitable covenant packages, bolstering medium-term liquidity and materially reducing near-term refinancing risk.

What did Centrus do to make it happen and add value?

• Used our comprehensive knowledge of each lender gained through our unrivalled experience in housing association mergers, particularly concerning lender exposure limits, tenor appetite and preferred covenants, to negotiate a great economic outcome which represented value for money for the combined organisation. This also included successfully negotiating lender transaction fees down to reasonable levels.
• Provided detailed insight into potential treasury costs and benefits that could be incurred through the transaction, as well as a fair valuation of capital markets debt liabilities being transferred, that allowed Abri to construct a thorough and prudent financial plan for the combined organisation.
• Developed a detailed funding strategy for the combined organisation which deals with short-term refinancing requirements and provides a framework for meeting future funding needs. The strategy enables a significant reduction in treasury risks while providing flexibility over future funding sources and timing.

“Abri’s partnership with Octavia allows the combined organisation’s vision to be realised; a founding housing association committed to exemplary homes and services. It provides the combined organisation with the opportunity to accelerate Abri’s strategic intent, leveraging its growing influence and resilience to provide excellent homes and services to customers, and best-in-class employment for staff.

The Centrus team’s unwavering commitment and impressive performance played a pivotal role to enable the rescue and preservation of Octavia Hill’s housing management legacy, allowing the combined organisation to continue her work as a reformer and positive disruptor. A reimagined Octavia Foundation will be central to this, with a broader remit across community investment, education and research, and thought leadership.

Centrus’ expert advice and support during the analysis, negotiation and completion stages of our engagement with a diverse group of funders was invaluable. This engagement was a particular challenge given Octavia’s well reported regulatory issues at the time, however the team at Centrus, led by Lawrence Gill and Akhil Shah, delivered on key targets within challenging timelines.

The Centrus team provided real commercial insight and helped us make key decisions on structure and terms, supporting through complex negotiations. They were proactive and very responsive, and great to work with as always.”

Caroline Moore, Chief Financial Officer – Abri Group

For more information, please contact Lawrence Gill, Director, Housing, Education & Care – Centrus.

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