Centrus advises Bernicia on £75m multi-deferred tranche private placement
Bernicia, a North-East housing association with over 16,000 units, has provided quality homes and services in North East England for more than 50 years. It has over 60,000 customers, employs 550 staff and has an annual turnover of c.£75m. Bernicia invests in homes, services and people to make a positive impact on North East communities.
Centrus undertook a strategic treasury and funding review, as well as becoming Bernicia’s treasury advisor in late 2019, identifying a number of areas for portfolio optimisation and supporting on development of a long term funding strategy. This review identified a number of opportunities, including rationalisation and restructuring of a number of legacy facilities as well as accessing the capital markets to obtain longer term funding to support development ambitions.
Centrus worked closely with Bernicia to position its strong operating position and governance, ESG credentials and astute strategy, to private placement investors, as well as to demonstrate the underlying strengths of the North East and Bernicia’s key role in the region.
The credit was strongly received by investors, demonstrating confidence in Bernicia’s inherent strengths and the North-East more generally. The transaction with Legal & General Investment Management as sole investor, resulted in low all-in pricing (enabling further rationalisation of legacy facilities), flexible covenants (supporting long term resilience) and multiple deferred tranches (reducing of carry implications and enabling forward funding of the business plan for several years, taking advantage of historic low rates and strong investor appetite).
Overall Bernicia has achieved increased weighted average life for its debt, lower cost of funds, further diversification of funding as well as locking in historic low cost long term funding, to further enable it to achieve its development ambitions. This is a great result for Bernicia, especially in a challenging economic environment.
Janette Longstaff, Executive Director of Finance - Bernicia Centrus has been seminal in supporting us throughout the process, from reviewing our funding portfolio, supporting us in formulating our long term funding strategy, to support in executing the private placement. Centrus’ knowledge of investor drivers, the sector at large, our organisaiton specifically (including positioning our intrinsic strengths and strategy), along with their support in positioning the North East as a region that is attractive and open for investment, strongly contributed to the success of this deal.
Sam Goldman, Director - Centrus We are delighted to support Bernicia on this landmark transaction, representing the fundamental strength of their business, long-term strategy and their position in and support for the North East. The structure provides cost effective deferred funding, with flexible covenants, a foundation that further supports Bernicia in achieving its long-term strategy.