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Flagship Housing Group implements titanTreasury

Overview

Flagship Housing Group (“Flagship”) has successfully completed the integration of titanTreasury, the Treasury Management System (TMS), delivered by Centrus.

Flagship provides 32,000 homes that house over 76,000 tenants in the East of England.

Flagship required an integrated TMS to calculate the rate of SONIA interest rates, calculate the cost of fix rate debt as well as automate the production of monthly treasury reports.

Centrus Solution

titanTreasury is an expert Treasury Management System (TMS) that offers financial departments and treasurers the best functionalities for monitoring and controlling operational market risk (rate, foreign exchange, commodities), credit and liquidity risks.

Centrus worked closely with the team involved in the treasury function at Flagship throughout the implementation, providing full training and support.

titanTreasury provides accuracy in calculating their Sonia-linked interest amounts and ensures that payments are made on the exact dates. With a complex syndicated loan, Flagship can rest assured that the system will help check their capital repayments as well as calculating the break cost value of their embedded fixes.

titanTreasury Benefits

  • Immediate access to treasury committee reports.
  • Control of liquidity and cash payments.
  • Clear view of debt maturity ladder.
  • Access to a compliance diary to track covenants review

With streamlined financial operations, Flagship is in a better position to focus on their target to solve the housing crisis in the East of England region.

“The implementation of titan went very smoothly and was a positive experience for the team. We were well supported throughout the process and ‘go live’ was reached with little drama.

We are looking forward to achieving the benefits of greater accuracy and improved reporting.”

Alex Fitzgerald, Head of Treasury and Regulation – Flagship Group

“We are thrilled to have added Flagship Housing Group to the growing list of housing association clients with titanTreasury.

With the ever-increasing pace of change, the remit of a treasurer is now much wider, having the responsibility of risk management, corporate finance, as well as partaking in the strategy and objectives of the business. Titan will help Flagship Housing manage its treasury and risk management processes from start-to-end, whilst minimising operational risk and improving reporting processes.”

Gilles Bonlong, Director – Centrus

For more information on titanTreasury, please contact Gilles Bonlong, Director at Centrus.

Centrus advises Yorkshire Water on £170m new Debt Service Reserve Guarantee

Transaction Overview

Yorkshire Water is a water supply and waste water treatment company serving the Yorkshire and Humber region. It treats and supplies approximately 1.3 billion litres of drinking water and collects, treats and returns approximately 1 billion litres of wastewater safely back to the environment every day.

Under Yorkshire Water’s ring-fenced financing structure, the business must have 12 months interest held as either cash or through committed amounts under liquidity facility agreements.

Previously, banks provided debt service liquidity facilities, whose agreements were continually renewed each year.

Interview with David Gregg, Head of Corporate Finance at Yorkshire Water

Centrus Solution

Centrus introduced an innovative five-year debt service reserve (DSR) guarantee provided by Assured Guaranty UK Limited (AGUK). This is only the second facility provided to UK utilities and the first in England. This was structured as an efficient long-term solution which also allows a recycling of bank capital into supporting other requirements in the business.

AGUK’s DSR guarantee was structured to fit within Yorkshire Water Services Limited’s existing financing documents and covers certain senior payment obligations due to secured creditors.

“Centrus has been a long-term financial advisor to Yorkshire Water and identified this innovative facility to us. We welcomed the opportunity to work with them, Linklaters, our legal advisors, and Assured Guaranty on structuring the debt service reserve guarantee to ensure an appropriate fit with our existing financing terms.

The successful outcome reflects a collaborative approach, providing a long-term, cost-effective solution to our requirements. We thank all our advisors, including Centrus, for their support and expert advice through a complex process.”

David Gregg, Head of Corporate Finance – Yorkshire Water

“Centrus is delighted to have introduced this solution and thereafter advised Yorkshire Water in delivering a valuable alternative to the long used bank market. This facility removes the need for the time consuming annual renewal of bank facilities for the debt service reserve and provides a welcome diversification of liquidity support to Yorkshire Water and its customers.”

Scott Wilsher, Senior Associate – Centrus

Centrus advises Yorkshire Water on the refinancing of £95m HoldCo facilities

Transaction Overview

Yorkshire Water is a water supply and waste water treatment company serving the Yorkshire and Humber region. It treats and supplies approximately 1.3 billion litres of drinking water and collects, treats and returns approximately 1 billion litres of wastewater safely back to the environment every day.

Yorkshire Water has refinanced its HoldCo £65m term loan facility and £30m RCF held by Kelda Finance (No.2) Limited, which were signed in 2015 with new 7-year and 5 year extendable facilities respectively.

To facilitate a future where all facilities at this level will be on the same terms, the opportunity was taken on this refinancing to introduce a common terms agreement for these facilities.

Interview with David Gregg, Head of Corporate Finance at Yorkshire Water

Centrus Solution

Given the improved credit environment for UK Water holding companies’ credit margins, Centrus ran a competitive process introducing new lenders to supplement the existing providers.

A Commons Term Agreement was established with the new lenders, Intesa Sanpaolo and Bank of China, not only to refinance the existing 2015 facilities but to facilitate, for the benefit of all parties, all HoldCo borrowings to be under common terms in the future.

Added Benefits

Centrus managed a process that allowed the company through introducing new lenders, to refinance its facilities on similar terms to those achieved in 2015, and as a result, create a new benchmark for subsequent refinancings at the HoldCo level. Bank of China, already a relationship bank, has increased its investment into one of the largest water utilities in the UK. Intesa Sanpaolo has become a new relationship bank, making its first investment into the group.

“I am delighted that we achieved this positive outcome, with efficient pricing and the introduction of a common terms platform. We would like to thank Centrus and Linklaters for their expertise, advice and support on this transaction.”

David Gregg, Head of Corporate Finance – Yorkshire Water

“Centrus is very pleased to have worked with Yorkshire Water, Intesa Sanpaolo and Bank of China on this financing, which has developed existing banking relationships and introduced new lending relationships to support Yorkshire Water.

This transaction reflects the value of the ongoing relationship between Centrus and Yorkshire Water. Centrus’ insight into Yorkshire Water’s business and requirements has delivered a successful outcome for all parties.”

Scott Wilsher, Senior Associate – Centrus

Centrus advises Onward Homes on a new £90m unsecured RCF

Transaction Overview

Onward are a leading provider of quality, affordable homes for rent and sale in the North West. From Southport to Stockport, the housing association owns and manages over 35,000 homes right across the region.

The housing association plans to build 500 homes a year whilst continuing to invest into existing homes. Onward’s successful bid to become a Homes England Strategic Partner in late 2021 accelerated this programme and increased liquidity requirements.

A new £90m RCF was required to meet this goal – with security being prepared to support the issuance of retained bonds and on-going challenges with local searches an unsecured solution was preferred, subject to cost.

Centrus Solution

  • Centrus provided early assurance to board on the potential viability of an unsecured facility.
  • We led development of a best-in-class information memorandum to support efficient lender credit assessment processes.
  • Advised on which lenders to target, how to position key mechanical / covenant requirements, and ensured initial terms were optimised.
  • Evaluated and negotiated the initial terms to ensure effective governance and the best possible outcome.

Added Benefits

  • Centrus identified the right lenders, maximised competitive tension, and enabled very strong initial bids.
  • With a number of attractive bids, we were then able to further tighten pricing whilst protecting covenants.
  • In initial documentation we ensured the unsecured mechanics where user-friendly and efficient, creating a template for future use.
  • The resulting outcome is a cost-efficient, flexible liquidity facility.

“Security is time-consuming and costly to put in place so our new unsecured RCF is a key part of our treasury strategy. John and the Centrus team supported this process throughout: from strategy through to final documents and Onward greatly benefited from Centrus’ treasury expertise and thorough understanding of our business. Their market engagement was excellent and I’m delighted with the outcome.”

Mike Gerrard, Executive Director of Finance – Onward

“This transaction has advanced the availability and attraction of unsecured finance for the whole sector. It also reflects the value in the holistic relationship between Centrus and Onward; from strategy development, through market testing, to close, Centrus’ insight into Onward’s business and requirements and what the market can offer have underpinned this successful outcome.”

John Tattersall, Senior Director – Centrus

For more information, please contact john.tattersall@centrusadvisors.com

Centrus advises Harworth on new £200m senior debt facility

Overview

Harworth is one of the leading land and property regeneration companies in the UK with a market leading portfolio: 

∼26.2m sq ft of industrial & logistics space (9.0m consented).

∼31k+ residential plots (c. 10k consented).

∼£271m premier logistics investment portfolio.

Harworth successfully refinanced the existing RCF debt facility of £150m with a new £200m RCF to provide the business with sufficient liquidity and flexibility to deliver on its business plan.

Strategic Rationale

Following a review of the business, Harworth is now implementing its new business plan strategy to double the size of the business in the next 5 – 6 years.

To meet strategic objectives, it was established, following comprehensive advice from Centrus, that the company’s debt capacity will need to be optimised to increase financial resilience and flexibility via tailored covenants and controls.

Centrus’ Added Value

  • Strategic advice on funding options leveraging Centrus’ knowledge base and experience of the real estate banking & broader capital markets. 
  • Utilising our network of relationships to drive competitive tension, leading and supporting with negotiations.
  • Dedicated support throughout the transaction to enable smooth execution and drive optimal result. 

“Harworth’s strong balance sheet and prudent gearing is one of the key enablers of our ambitious growth strategy. This new debt package, which adds another established institutional lender to our banking group, will provide Harworth with additional firepower and flexibility as we step into this strategy and deliver our Purpose of creating places where people want to live and work.”

Lynda Shillaw, Chief Executive – Harworth Group plc

“We are thrilled to have supported Harworth in this successful debt capital raise to allow the business to deliver its strategic ambitions of growing to double the current size, providing much needed new premier industrial developments and attractive and affordable family housing in the UK.”

Omer Fazal, Head of Real Estate – Centrus

Centrus supports InfraRed with the implementation of CPI hedging

Transaction Overview

Centrus supported InfraRed Capital Partners (InfraRed) with the structuring, pricing and execution of CPI hedging in relation to a UK offshore wind project (the Project).

The Project benefits from a CPI-linked contract-for-difference provided by the Low Carbon Contracts Company (owned by UK Govt).

Centrus supported InfraRed in all aspects of implementing the hedging strategy that achieved all stakeholder objectives, retained future flexibility and enhanced InfraRed’s risk management capabilities now and in the future.

Centrus Solution

We worked very closely with the InfraRed team through the process, providing support in all aspects of the transaction including:

  • Request for proposal process across relationship banks and the wider market
  • RPI-CPI wedge pricing
  • Negotiating ISDA documentation
  • Coordination and benchmarking of the execution process

This resulted in the successful implementation of a structured hedging strategy meeting all stakeholder objectives, maintaining strong banking relationships, mitigating risks and ensuring future flexibility for a continued growth plan.

Centrus Added Value

  • Analysing hedging strategies for cost/return metrics and simulations at various exposure levels
  • Assessing various credit structures from pricing, covenant and documentation perspective to support in determining the appropriate structure for the transaction
  • Working with all stakeholders (client, banks, legal advisors) to implement the hedging
  • Developing and running a competitive process to ensure deliverability and flexibility to achieve key objectives

“Centrus supported us through this CPI hedging transaction, they actively managed the process from start to finish and their analysis helped us build robustness into the cashflows and real equity returns under different inflation scenarios. The team used their significant expertise to assist with structuring the hedging, running a competitive pricing process and were on hand to deliver a transaction that met our objectives.”

Ben Smith, Portfolio Management – InfraRed Capital Partners

“Through this transaction, InfraRed have managed to afford themselves significant downside protection against adverse market movements, and as a result greater certainty around investment return. Recently we have seen a material pick up in pro-active risk management in the face of increased volatility across financial markets”

Mark Taheny, Director – Centrus

For more information, please contact mark.taheny@centrusadvisors.com

Centrus raises €35m of privately placed debt for The Henderson European Focus Trust

Centrus is pleased to announce that The Henderson European Focus Trust (“HEFT”), the UK-listed investment trust managed by Janus Henderson Investors, has successfully raised long-term debt of €35 million.

The financing is divided into the following tranches:

  • €25m 1.53% Notes due 2047
  • €10m 1.66% Notes due 2052

Centrus supported HEFT in the preparation and marketing of the financing including liaising with a number of investors and other stakeholders, monitoring market conditions, advising the board on the structure of the debt as well as negotiating the terms and conditions of the private placement.

We are delighted to add HEFT to the wide range of investment trusts that Centrus has supported. These include:

The Mercantile Investment Trust – £150m Private Placemen

September 2021

Managed by JP Morgan, The Mercantile Investment Trust is a large-scale, UK-focused trust with gross assets as at end 2021 of approximately £2.8bn.

With support from Centrus, the trust raised £150m of long-term debt, separated into three trances:

  • £55m 1.98% Notes due 2041
  • £50m 2.05% Notes due 2051
  • £45m 1.77% Notes due 2061

Mercantile is one of the very few investment trusts with an explicit credit rating – AA from S&P.

The Edinburgh Investment Trust – £120m Private Placement

September 2021

Managed by Majedie Asset Management, The Edinburgh Investment Trust’s (“EIT”) gross assets, as at end 2021, totalled approximately £1.3 billion.

EIT raised £120 million on an unsecured basis, and split into four tranches:

  • £35m 2.26% Notes due 2037
  • £35m 2.49% Notes due 2047
  • £20m 2.53% Notes due 2051
  • £30m 2.53% Notes due 2057

An unusual feature of this private placement was that settlement of £100m of the proceeds was deferred until Sept 2022 to coincide with the maturity of a £100m listed bond issue.

Scottish Oriental Smaller Companies Trust – £30m Private Placement

March 2021

Managed by First Sentier Investors, The Scottish Oriental Smaller Companies Trust invests in smaller listed companies across Asia, with net assets as at end 2021 of approximately £337 million.

Centrus advised the trust on a £30m debt private placement, priced with a fixed coupon of 2.75% for a term of 20 years.

Aberdeen Diversified Income and Growth Trust – Bond Liability Management

October 2020

Aberdeen Diversified Income and Growth Trust’s (“AIDG”) gross assets amounted to approximately £381 million, as at end 2021.

Centrus advised AIDG on a public bond tender to repurchase up to £45m of its outstanding £60m 6.25% bonds due 2031. A total of £43.9m of bonds were tendered and repurchased by ADIG, leaving approximately £16m of bonds outstanding.

The AIDG board announced that the bond buy back had a number of benefits including reducing leverage, increasing cash flow and increased capital management flexibility.

The Monks Investment Trust – £100m Private Placement

August 2020

Managed by Baillie Gifford, The Monks Investment Trust (“Monks”) had gross assets, as at end 2021, of approximately £3.4bn.

Exceeding Monks’ original fundraising intentions, Centrus raised a total of £100m for the trust, divided into two tranches:

  • £60m 1.86% Notes due 2054
  • £40m 1.77% Notes due 2045

The Scottish American Investment Company – £80m Private Placement

April 2019

Managed by Baille Gifford since 2004, The Scottish American Investment Company (“SAINTS”) had gross assets, as at end of 2021, of approximately £1bn.

The transaction comprised two separate tranches of £40m each with maturities of April 2045 and April 2049 and a fixed coupon of 3.12% payable semi-annually.

An unusual feature of this financing was that settlement was deferred for three years until April 2022 to coincide with the maturity of an £80m listed bond issue.

Alliance Trust – £60m Private Placement

October 2018

Alliance Trust, a FTSE 250 Investment Trust with gross assets, as at end 2021, of approximately £3.7bn, successfully completed a long-term financing in the private placement market.

Centrus arranged a £60m financing divided into three tranches::

  • £20m 2.66% Notes due 2033
  • £20m 2.94% Notes due 2043
  • £20m 2.90% Notes due 2053

For more information, please contact robert.stjohn@centrusadvisors.com

Centrus supports Equitix transition from LIBOR to SONIA

Background

LIBOR has been on its way out since, in 2017, the FCA declared it would cease to be published and the market should look to transition to a more robust reference interest rate. This meant legacy LIBOR referencing loans and derivatives would have to transition to SONIA, the chosen alternative rate, by the set deadline of 31st December 2021.

Given the vast number of companies under Equitix management, the majority of which have LIBOR referencing contracts, Centrus were engaged to support bank negotiations, project manage the various stakeholders involved and reduce the overall cost of the transition through efficiencies achieved.

Given some of these contracts have a predetermined LIBOR period ending in 2022, work is still ongoing to transition these ahead of the next interest payment dates.

Centrus Solution

  • Centrus approached lenders to negotiate transition protocols across LMA and ISDA agreements, as pre-agreed approach with shareholders.
  • Acted as the point of contact and handled project management of the transition across bank counterparties and legal advisors.
  • Supported the execution and implementation of loan agreements, together with legal advisors.
  • Advised on the amendment to ISDAs/trade confirmations to ensure they mirror the agreed approach on the loan side.
  • Advised on practical aspects of maintaining debt instruments with RFRs going forward.

Benefits

  • Centrus’ appointment allowed for a consistent position to be put to lenders, and pushed for market standards amongst lenders.
  • Acting as the point of contact for the large volume of lender communication on the transition reduced the work-load for the company directors.
  • Having an overview of the portfolio companies’ financing helped to streamline the transition process.
  • Offered independent advice when supporting both Equitix and their co-shareholders.

“Centrus´ expertise and project management skills helped us transition from LIBOR to SONIA on over 100 different financing platforms. This also involved managing a range of stakeholders, including 40+ existing lending relationships. We are delighted with their support, which resulted in significant efficiencies.”

Sophia Thorpe-Costa, Director – Equitix

“It was a pleasure to work closely with the Equitix team and manage this workstream on their behalf. We hope this relationship can lead to further interesting initiatives.”

David Cerqueira, Director – Centrus

For more information, please contact adam.macdonald@centrusadvisors.com

Centrus advises Valleys to Coast on their first Sustainability Linked RCF

Transaction Overview

Valleys to Coast is a not-for-profit housing association that provides and manages nearly 6,000 homes across Bridgend, South Wales.

As Valleys to Coast increased their aspirations to deliver more homes, they needed additional liquidity to match the increased expenditure. Centrus advised on a holistic strategy to not just increase liquidity but ensure the overall treasury platform was fit for purpose.

Centrus Solution

  • A full strategy review and market engagement process highlighted the key concerns for Valleys to Coast.
  • A combination of accessing the capital markets via bLEND and a new bank RCF was chosen as the preferred solution.
  • Centrus negotiated terms across a number of new and existing lenders, ultimately extending and amending an existing facility to more favourable terms.

Added Benefits

  • Valleys to Coast will now benefit from long-term, fixed-rate finance from bLEND at very competitive rates – significantly below what it may be able to achieve independently in the capital markets, and with fewer covenants.
  • The sustainability linked RCF aligns with Valleys to Coast’s overall sustainability and ESG strategy, ensuring it is financially rewarded for achieving its ambitious social and environmental targets.
  • This will enable Valleys to Coast to improve the energy efficiency of its homes, reducing bills for its customers, and help increase employment in its local area through internship programmes.

“Centrus were supportive throughout the process, providing valuable advice and assurance for our Board. We have now secured cost-effective long term funding to enable us to deliver our ambitious corporate plan objectives in the years to come.”

Claire Marshall, Corporate Director of Finance, Governance, Strategy and Performance – Valleys to Coast

“It has been a pleasure working with Valleys to Coast to deliver a transformational financing programme for the business. Aligning their ESG strategy with the financing will allow them to deliver even greater value to their stakeholders.”

Lawrence Gill, Director – Centrus

For more information, please contact lawrence.gill@centrusadvisors.com