Centrus Supports North Star’s Growth Strategy with £20 Million Bank Term Loan

What value did Centrus add?

• Centrus identified the key requirements of the new facility and led a competitive fundraising process, utilising its market-leading insight to obtain cost-effective and covenant-supportive options, before recommending an option that aligned with North Star’s strategy.
• Centrus structured the fundraising process to deliver optimal results on key commercial terms. Centrus successfully negotiated with the chosen lender to secure a meaningful interest margin discount on an already economically strong offer.
• Centrus also enabled appropriate future interest rate risk management by providing relevant assurance on available hedging products, empowering North Star’s Board to reach a reasoned decision on entering the organisation’s first loan-linked ISDA arrangement.

How did this transaction benefit North Star?

• New £20m term loan to deliver medium-term investment plan
  • Enables North Star to develop new homes and decarbonise/replace components in existing homes.
  • Provides a 2-year availability period, offering appropriate flexibility in the timing of expenditure while minimising the cost of carry.
• Very competitive pricing achieved, saving £10,000 interest per annum after Centrus negotiated the initially offered margin down, and allowing North Star to demonstrate substantial value for money.
• Financial, security and key corporate covenants optimisedNew £20m term loan to deliver medium-term investment plan
  • Maintained inherent flexibility within North Star’s already very favourable wider portfolio.
  • Reinforced capacity and financial resilience.
• Appropriate structuring to manage treasury risk effectively.
  • Loan-linked ISDA hedging will enable North Star to manage interest rate risk without being exposed to further security risk.
  • Avoiding capital repayments at the same time as other loans across the wider portfolio, reducing refinancing risk.

“We are delighted to have worked with Centrus to raise a new £20m bank term facility. Centrus provided expert advice and support during the analysis, negotiation and completion stages of our engagement. This was pivotal in reaching a great outcome and afforded the Board the confidence that treasury arrangements are optimally structured to provide a strong platform to meet our ambitious corporate objectives. They always provide first class service – I really enjoy working with them and they always deliver!”

Andrew Carlton, Executive Director of Finance and Business Support – North Star Housing Group

For more information, please contact Akhil Shah, Assistant Director, Housing, Education & Care.

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