The winner in this year’s Corporate Finance category was GreenSquareAccord, which was created as a result of the merger of two housing associations, GreenSquare and Accord, in April 2021. Combining members of the legacy GreenSquare and Accord treasury teams, the new GSA Corporate Finance & Treasury team embarked on creating a new treasury structure.
To deliver the merger, consent needed to be obtained from existing funders, while existing covenants needed to be aligned and optimised. This involved negotiating with 19 funders for consent, with a bespoke negotiation strategy needed for each funder, and with all negotiations carried out virtually during the pandemic. As the existing funding agreements were disparate and not aligned to the target treasury structure, the team had to define individual strategies for each funder.
Initially, the team established that three funders would not provide consent, while a further three funders would require significant effort to shift their perceptions of credit risk. To mitigate this, the team ran a credit ratings strategy alongside the funder negotiations. They also sought increased facilities, reshaped the facilities to provide better liquidity and reshaped the loan portfolio’s amortisation profile. In addition, the team instigated a Plan B to secure a £75m 40-year loan from a bond aggregator to take advantage of constructive issuance conditions.
Subsequently, the three funders that would not provide consent were removed, incurring break costs of £888,000 with only one funder. The other three funders were retained through various methods, with an additional funder added post-consent. Further achievements included reducing WACC from 3.13% to 2.96%, moving WAL from 12 to 13 years, harmonising key financial and non-financial covenants, and increasing liquidity facilities from £300m to £360m.
Provider: Barclays, Co-op, Dexia, Lloyds, MUFG, NatWest, Santander, Triodos, Unity Trust, Yorkshire Building Society, Affordable Housing Fund, Aviva, BlackRock, bLEND, European Investment Bank, Link Asset Services, MetLife, National Grid, Pension Insurance Corporation, RentPlus, The Housing Finance Company.
Structure: Negotiated with 19 funders for consent for the merger while achieving harmonised terms, increasing liquidity, debt and asset security capacity, and implementing a credit rating strategy.
“This was a very complicated deal, completed in a fair amount of time with a good outcome – very impressive.”
Anglian water
Also recognised in this category was Anglian Water, the UK’s largest water and sewerage company, with the adoption of a new financing structure and strategy in relation to £7.5bn of debt across the group. The new strategy was developed to tackle challenges faced by the business and the capital structure in light of the 2019 regulatory settlement announced by Ofwat, the water industry regulator.
The new transformative financing structure included £1.4bn of new debt facilities, £300m of which was a worldwide first for a water company: the first net zero-based sustainability-linked bond, connected to the company’s interim 2025 carbon targets. All in all, this was a highly complex undertaking that involved multiple workstreams and coordination by the treasury team, as well as extensive legal work and input from the regulatory team