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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

Consortium acts as financial adviser to Ofgem on transfer of offshore wind farm transmission link

Smith Square Partners Consortium acts as financial adviser to Ofgem on the £573 million completed transfer of Triton Knoll offshore wind farm transmission link from RWE Renewables to ETEPCO (a consortium of Equitix Limited and TEPCO Power Grid Incorporated)

On 01 December, 2023 Ofgem announced its confirmation to grant an Offshore transmission licence to ETEPCO (a consortium of Equitix Limited and TEPCO Power Grid Incorporated). This sees the transfer of the £573 million offshore transmission link from RWE Renewables, the developer of the Triton Knoll offshore wind farm, to London based Equitix Limited and TEPCO Power Grid, a Japanese utility company headquartered in Tokyo. 

The Triton Knoll wind farm consists of 90 turbines, has a capacity of 857MW and is located 33km from the Lincolnshire coast in the North Sea.  

The Smith Square Partners Consortium has been advising Ofgem in relation to sales of offshore wind farm transmission assets since 2020 when it was first appointed by Ofgem for Tender Round 7 and continues to advise on tender rounds up to and including Tender Round 10.  Its advice has related to transmission assets for seven offshore wind farms with a projected generation capacity of 6.7 GW and combined asset values of c. £5.2 billion. 

The Consortium comprises financial advisers Smith Square Partners and Centrus, with CEPA providing financial and related economic advice, tax advice provided by BDO and forensic cost reviews provided by Grant Thornton.

“Offshore windfarms are critical to the UK’s energy transition targets with a fivefold increase to 50GW target by 2030 with OFTO transactions playing a key part in the process. We are pleased to close this transaction with our consortium colleagues and player our part in contributing to the UK’s renewable energy and Net Zero targets.”

Adam MacDonald, Managing Director – Centrus

For more information, please contact Adam MacDonald

Centrus arranges a €71m and ¥2.5bn private placement for The Monks Investment Trust

Transaction Overview

The Monks Investment Trust PLC (“Monks”) was founded in 1929 and has been managed by Baillie Gifford since 1931. Baillie Gifford is an unlimited liability partnership founded in 1908 and is solely focused on investment management. It is one of the largest investment Trust Managers in the UK.

On the 13th December 2023, Monks announced that it has issued a total of approximately £74 million equivalent of fixed rate, senior, unsecured privately placed notes, denominated in Euros and Japanese Yen, over periods ranging from 7 to 14 years.


Centrus Solution

Monks has issued four tranches of privately placed Notes: 

  • EUR18 million with a fixed coupon of 4.30% to be repaid in 2030
  • EUR35 million with a fixed coupon of 4.29% to be repaid in 2033
  • EUR18 million with a fixed coupon of 4.55% to be repaid in 2035
  • JPY2,500 million with a fixed coupon of 2.17% to be repaid in 2037

Coupons are payable semi-annually. 

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


Outcome

  • This transaction provides Monks with medium-term financing across a range of maturities and at a competitive weighted average interest rate of 3.96%.
  • The Monks’ Board remains committed to the strategic use of borrowings for the Company in order to enhance returns to shareholders over the long term and has set a guideline gearing level of 10%.
  • This new financing will serve to bring Monks’ level of gearing into line with the company’s target level, and to reduce the average cost of borrowing.

“Monks has a diversified portfolio with assets held across a range of sectors and industries and with exposure to several major currencies including USD, EUR, JPY and GBP. In order to benefit from lower coupon currencies, Monks decided to borrow predominantly in EUR but including a modest tranche in JPY with the financing provided by two investors offering attractive terms across a spread of medium term maturities”

Robert St John – Centrus

For more information, please contact Robert St John.

Centrus arranges £30m private placement for Heart of Medway 

Transaction Overview

Photo of a women and teenager

Founded in 2010, Heart of Medway is a registered provider of social housing and is a subsidiary of the mhs homes group. The Housing Association provides over 900 affordable and shared ownership homes to over 1,800 people in Kent.

In November 2023, Heart of Medway secured a £30m private placement transaction with Pension Insurance Corporation (“PIC”) which was split across two tranches; £20m drawn at spot and £10m deferred by 24 months, both carrying a 20-year maturity. The transaction allowed Heart of Medway to access flexible, long-dated capital markets funding against the backstop of a challenging macroeconomic environment.


Centrus Solution

Centrus acted as sole arranger which involved working with Heart of Medway to develop an optimal financing strategy while providing ongoing advice, business planning advice and support throughout the process. 

The funding package will help Heart of Medway to support its future growth ambitions and achieve its long-term goals. As an existing lender to the company, PIC was keen to lend further support to the business by helping to tackle the ongoing housing crisis throughout England.

“Over the last 10 years, Heart of Medway has grown from a fledgling housing association that built its first home in 2011, to a well-respected provider with a strong delivery record. 

There’s a huge demand for affordable housing in Kent and this new private placement, a result of our long-term relationship with PIC, will help us continue to meet the needs of our local communities. We’re pleased to have worked again with PIC and Centrus to secure this funding which will allow us to build more affordable homes for people who desperately need them.” 

Bruce Shelmerdine, Group Finance Director – mhs homes group

“We are delighted to have supported Heart of Medway in securing £30m of competitively priced long-term funding to support its growth ambitions. 

The PP was structured to help minimise costs, with £10m undertaken on a 2-year deferral, to support business requirements while accessing a highly competitive rate. Use of master PP agreement from a prior Centrus arranged issuance, allowed a quick execution time with the process completed within two months, ensuring Heart of Medway could transact at the most optimal time and benefit from the recent Gilt pull back.” 

Tom Miller, Assistant Director – Centrus

For more information, please contact Tom Miller.

Centrus advises Abri Group and Silva Homes on merger

Centrus’ Role

The partnership results in Abri Group becoming a 50,000 home organisation – Centrus acted as sole corporate finance advisor to both entities. This role involved: 

  • Merger treasury strategy formulation and execution, including business plan appraisal, capacity analysis, legal structure appraisal, consent cost analysis, liquidity and funding analysis, and credit rating strategy, feeding into the outline and full business cases. 
  • Engaging 10 lenders including banks, bond aggregators and UK investors.
  • Providing insight and guidance throughout the lender consent process.  
  • Assurance reporting (including to Joint Steering Group), project management and support to legal teams / other professional advisors.

Landscape and Outcomes

  • Centrus delivered the merger on time, whilst successfully gaining consents across a complex lender engagement landscape.
  • Focused negotiations minimised NPV cost of facility restructuring / refinancing; loss of value limited to 3 lenders whilst value gained with 2 lenders – net loss of value in legacy facilities equated to less than 5% of value at risk, substantially outperforming estimates.
  • Hedging restructuring across 3 lenders; realisation of in-the-money positions leading to final aggregate net income position whilst reducing ongoing interest costs. 
  • Target financial covenants and definition harmonisation achieved with moderate exceptions, resulting in substantial increase in debt capacity and financial resilience.
  • Greater corporate freedoms around financial support and merger consents negotiated, including forward consent for Silva Homes to fully combine with Abri Group in future.

“The merger provides Abri with a strong platform to build new homes and invest in existing ones, creating a sustainable future for the thriving and inclusive communities we support. 

Centrus provided expert advice and support during the analysis, negotiation and completion stages of our engagement with a diverse group of lenders. The impressive team at Centrus, led by Lawrence Gill and Paul Stevens, 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 some relatively complex covenant negotiations and financial close pricing exercises. They were proactive and very responsive, and great to work with on this deal. We look forward to working with Centrus in the future.”


Caroline Moore, Chief Financial Officer – Abri Group

For more information, please contact Lawrence Gill, Director – Centrus

Sovereign Housing Association and Network Homes merge to form SNG

Centrus’ Role

Sovereign Housing Association and Network Homes have merged to form Sovereign Network Group.

Centrus acted as the sole corporate finance advisor on the merger. This role involved: 

  • Merger treasury strategy formulation and execution, including business plan appraisal, capacity analysis, legal structure appraisal, consent cost analysis, credit rating strategy, feeding into the outline and full business cases. 
  • Engaging 34 lenders including banks, US & UK investors and local authorities.
  • Providing insight and guidance throughout the lender consent process.  
  • Assurance reporting (including to Joint Board), project management and support to legal teams / other professional advise.

Landscape and Outcome

  • Centrus delivered the merger on time, whilst successfully gaining consents across a complex lender engagement landscape.
  • Determined negotiations minimised NPV cost of facility repricing/restructuring, limited to 3 lenders. Loss of value in legacy facilities outperformed estimates, equating to less than 20% of value at risk. Only 1 hedging restructure. 
  • Target financial covenants and definition harmonisation were achieved with moderate exceptions, resulting in a very substantial increase in debt capacity.
  • Much greater corporate freedoms were negotiated around financial support and future merger consents. This includes forward consents to enable Network Homes to fully combine with Sovereign in future.

“Centrus provided skilful support during the analysis, negotiation and completion stages of our engagement with a very diverse group of funders. The impressive team at Centrus, led by Lawrence Gill and Paul Stevens, were focused on achieving the challenging targets set by both organisations within very aspirational timelines, making productive use of their extensive relationships with funders. 

We look forward to working with Centrus in the future.”


Peter Benz, Chief Financial Officer, SNG 

For more information, please contact Paul Stevens, Director at Centrus

Centrus advises TRIG on power price hedging for a UK solar portfolio

About TRIG

The Renewables Infrastructure Group (TRIG) was one of the first investment companies investing in renewable energy infrastructure projects listed on the London Stock Exchange.

TRIG completed its IPO in 2013 and is now a member of the FTSE-250 index with a market capitalisation of c.£2.8bn (Aug 2023). 

TRIG’s diversified portfolio includes onshore and offshore wind farms, solar parks, and flexible storage in the UK and Europe.


Transaction Overview

  • Centrus supported TRIG with the structuring, pricing and execution of power price hedging for a UK solar portfolio.
  • Centrus supported TRIG in implementing the hedging strategy that achieved all stakeholder objectives and retained future flexibility through an extremely volatile period during which a number of regulatory changes occurred.
  • Through utilizing a Pay-as-Produced financial hedge structure across a range of tenors, Centrus helped TRIG to  enhance their risk management.


Centrus Solution

  • Support with assessing & determining initial hedging trade level.
  • Initial market soundings for appetite & high-level feedback around structure & timing.
  • Coordination of Non-Disclosure Agreements with counterparties.
  • Feedback and negotiation with banks/providers to ensure competitive tension.
  • Support with final steps to onboarding and counterparty set up.
  • Coordination of power hedging protocol.
  • Independent check of market rates during dry runs and execution call.
  • Investigation of any discrepancies identified during process.
  • Participation and coordination of dry run and live execution exercises.
  • Review of trade confirmations for accuracy post execution.

“Centrus advised us throughout each stage of the power price hedging process and we benefitted from their extensive market knowledge and expertise to ensure a successful outcome was reached. 

We look forward to working with Centrus again in the future.“

Phil George, CFO – TRIG 

“We are delighted to have supported TRIG on this important transaction for their solar portfolio. Centrus were able to assist in engaging a range of counterparties who were able to act throughout the various stages of the energy crisis and provide various products.”

Mark Taheny, Director – Centrus

For more information, please contact Mark Taheny

Centrus advises V&F Homes on financing of affordable homes portfolio

About V & F Homes

V&F Homes, a provider of social housing, has financed its affordable homes portfolio with Secure Trust Bank. 

The portfolio, consisting of 34 properties in East Anglia made up of shared ownership and affordable rental homes, purpose built to help first time buyers get on the housing ladder, has received a bespoke investment facility to fund further growth. 


Centrus Solution

Centrus acted as advisor and arranger for V&F Homes, running the process to find a suitable debt funder for a smaller sized, specialist portfolio. 

Despite it being a difficult time to enter the market due to continuing interest rate increases, Centrus negotiated with Secure Trust (including going beyond some of their internal limits) to ensure the deal worked for both sides. 

A total of C.£1.4m debt raised was secured against the housing assets. 


Added Benefits

The Loan, which has a term of five years, required specialist knowledge in this area of real estate finance, given the suite of properties is designated as affordable housing and shared ownership properties.

With previous experience in structuring these tailored loans and flexible lending, STB was able to navigate this specialist area of real estate finance to give V&F Homes a facility that allowed them to purchase and expand the portfolio.

“Centrus tabled three prospective lenders, helped us select the best option and then guided both parties through the process in a professional and friendly manner.”

Charles Vaughan, Director – V&F 

“It was a pleasure to work with V&F and STB on this transaction. All parties worked pragmatically towards a solution in a volatile interest rate environment to ensure V&F can continue its growth and provide more high-quality affordable homes in its local area.”

Lawrence Gill, Director – Centrus

For more information, please contact Lawrence Gill

Centrus advises Finerge on c.€1.6bn Hedge Restructure

About Finerge

As Portugal’s second largest renewable energy producer, Finerge has worked to provide access to more sustainable energy sources to the world for over 25 years.

Finerge operates 70 Wind Farms and 17 PV solar plants located in more than 47 Municipalities across Portugal and 3 provinces in Spain. 

Day and night, more than 770 turbines harness the energy of the Wind and thousands of photovoltaic modules that collect energy from the sun. 

All this means that more than 1,176ktons of CO2 emissions are avoided.


Transaction Overview

Centrus worked with Finerge to develop an appropriate hedging strategy to optimise their debt restructure and refinancing transaction from a risk management perspective including:

  • Options appraisal and Market Analysis
  • Pre-Hedging
  • Restructuring
  • Novations and Terminations
  • Reprofiling

This resulted in an optimised restructure that met the client’s objectives, managed associated risks effectively and was delivered in a timely manner through a fair and transparent process.


Centrus Support

  • Assisted in identifying appropriate hedging instruments & implementation strategies
  • Supported in sourcing & negotiating competitive, fair & transparent pricing 
  • Assisted in the commercial negotiation & execution of financing & hedging documents
  • Assisted in executing the strategy with relevant counterparties 
  • Ran quantitative analysis to support the recommendation of the optimal hedging strategy
  • Independent check of market rates during dry-runs & execution calls
  • Investigated any discrepancies identified during process
  • Participated & coordinated dry-runs & execution exercises
  • Review of trade confirmations for commercial accuracy post execution

“Centrus supported us through every step of the process, implementing effective hedging strategies to support our restructure. Their advice was always transparent and they helped us understand the crucial effects of each step. Our experience with Centrus was commendable and we wouldn’t hesitate to work with them again.”

Eduardo Camino, CGO – Finerge

“Working with Finerge on such an important transaction for the company was a pleasure. Centrus was happy to be able to assist in implementing an effective hedging and pre-hedging strategy in an extremely volatile interest rate market. It was no small feat but everyone involved from the banks to the client were pivotal in making it a successful transaction.”

Mark Taheny, Senior Director – Centrus

For more information, please contact Mark Taheny