£80M debut private placement for Two Rivers Housing

Background

• Two Rivers Housing is a former-LSVT housing association based in the Forest of Dean, managing over 4,000 homes across Gloucestershire and Herefordshire.
• It has maintained a single banking relationship, and the debt portfolio was largely unchanged since transfer in 2003.
• Two Rivers Housing was seeking additional funding suited to the growth and stock investment ambitions of the organisation.

Our Approach

• Chatham initially conducted a detailed analysis of the debt portfolio, highlighting opportunities for restructure.
• The team modelled a new business plan to reflect the benefits of a restructured debt portfolio and significant capacity to develop new homes.
• Two Rivers Housing embarked on a partial refinancing, including raising a new £50M revolving credit facility (RCF) at tight margins and renegotiating its existing long-term bank loans.
• The refinancing culminated in Two Rivers Housing’s debut private placement transaction, raising £80M including a one-year deferred tranche.

Benefits

• Two Rivers Housing successfully restructured the debt portfolio to suit the future funding requirements of the business.
• It secured £80M from a US institutional investor, enabling the repayment of certain banking facilities, as well as providing certainty of funding for the future development programme.
• The deferred drawdown tranche was priced with no additional premium, helping to manage negative cost of carry.
• At the same time, Two Rivers Housing renegotiated the size, final maturity, and covenant package of its existing banking loans.
• This was achieved while keeping the lending margins static for the first five years, and without realising any mark-to-market (MTM) costs.