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Centrus Advises Affinity Water on Index Linked Bond Tap

Centrus Advisors has provided advice to Affinity Water (“AW”) regarding its engagement with bondholders in connection with a Security Trust and Intercreditor Deed (“STID”) proposal. Having obtained the support of its bondholders and successfully completed the STID proposal in June, AW then turned its attention to raising additional index linked finance through a £40m nominal tap of its £150m 1.548% 2045 index linked bond issue. While there was no immediate need for funds, the Board was keen to lock into the Gilt yield and bond spread levels that were prevailing at that time. However, with its London listed MTN programme having lapsed there was no documentation in place at the time which would have enabled AW to tap its 2045 issue or issue any other publicly listed bond.

Centrus Advisors assisted AW in identifying an investor which was willing to commit to buying a tap issue and to pricing the tap at the time of purchase but with settlement delayed for 3 months at no additional cost to AW. While AW agreed to use its best endeavours to update its MTN programme so that the tap of the existing £150m issue could take place, there was no certainty that a prospectus could be provided within the three month settlement period. Consequently, an agreement was reached with the investor that in the event that a new prospectus had not been listed by the settlement date which had been fixed for the end of October, the issue would be documented as a private placement providing certainty to both the investor and AW. In the event, AW listed a new prospectus in September and the £40m tap issue was announced on 21st October and settled at the end of the month.

The advice provided by Centrus to AW demonstrates an ability to utilise our capital markets experience in developing bespoke and flexible solutions for issuers and investors alike. We are pleased to have supported Affinity Water in meeting its financing objectives and achieving this outcome.