Genesis Housing Association Buyback of RSL Finance No.1 PLC
Centrus was approached by Genesis regarding a legacy group bond issue where Genesis had a £60m outstanding notional liability but where onerous security terms meant that £180m of property security was secured and could not be released. Genesis had approached the liability management team from one of its relationship banks which had recommended a formal cash tender to buy back the bonds at an estimated cost to Genesis of 100bps but which carried significant execution risk. Centrus advised Genesis that there may be an institutional investor which held the RSL Finance bonds and which may be prepared to exchange the bonds in return for a new private placement between themselves and Genesis. Centrus approached the investor in question and was able to support Genesis in negotiating terms from them at a premium of 50bps and a structure designed to avoid a c.£14m accounting loss which would have resulted from a cash tender. This transaction demonstrated our ability to combine debt capital markets experience with an innovative approach to liability management, which reduced our client’s execution and accounting risk and generating savings of around £3.5m.