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£80M debut private placement for Two Rivers Housing

Date:
September 23, 2020

Summary

A case study of how Chatham advised Two Rivers on its refinancing, including a debut £80M private placement.


  • £80M long-term capital markets financing raised
  • 2.45% coupon on debut deal
  • £50M raised through an additional RCF

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.

The funding will help us deliver on our promise to build 1,000 new affordable homes in Gloucestershire and the surrounding area by 2028. We’d like to thank Chatham Financial, for their help and support throughout this process.

Carol Dover, Two Rivers Housing

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.

About the author


Disclaimers

This material has been created by Chatham Financial Europe, Ltd. and is intended for a non-U.S. audience. Chatham Financial Europe, Ltd. is authorised and regulated by the Financial Conduct Authority of the United Kingdom with reference number 197251.