Cottsway Bank Renegotiation & £130m of Bank and Institutional Financing
Cottsway Housing Association, based in Whitney, West Oxfordshire closed an £80m fixed rate debt financing with a final maturity of 2055 provided by a single institutional investor making its first investment in the UK housing sector. In addition, it has established a new £50m revolving credit facility with Lloyds Banking Group. The new financing was raised as part of a renegotiation of Cottsway’s existing banking facilities which has increased the company’s future ability to address the strong demand for new affordable housing in its area of operation.
Centrus acted as financial advisor to Cottsway through the renegotiation of its banking facilities, obtaining a credit rating and the raising of the new bank and institutional financing. The long term debt financing was initially planned as a listed bond issue but in the light of market conditions following the changes to housing association rents announced in the July budget, a decision was taken to proceed with a private placement in order to reduce execution risk for Cottsway, demonstrating our ability to use our experience in guiding clients through difficult market conditions. Under Centrus’ guidance, Cottsway gave presentations to a selected number of institutional investors one of which was selected based on competitive pricing and other terms. A part deferral offered Cottsway the ability to fix the coupon on the full £80m but to draw down an initial amount of £70m at closing with the final £10m to be drawn down in 2016. In addition, the investor has provided a shelf facility for up to a further £50m to be utilised within the next 3 years on the same conditions but with the coupon on the new finance to be fixed when additional funds are drawn.